--- title: "ITM, ATM, OTM: intrinsic and time value, with Nifty data" description: "In the money, at the money, out of the money, intrinsic value and time value, worked on a dated NSE Nifty chain, with the common mistake about cheap options." source_url: "https://www.rupeecase.com/learn/path-14/module-14-4-moneyness-intrinsic-and-time-value" --- [Path 14 4 of 17](/learn/path-14/)Moneyness, intrinsic value and time value[Next 14.5](/learn/path-14/module-14-5-what-moves-an-option-price) On Tuesday 16 Jun 2026 Nifty closed at 23,989.15. Two calls for the 30 Jun expiry sat about the same distance either side of it: the 23,500 strike, 489.15 points below the index, and the 24,500 strike, 510.85 points above. The first cost Rs 566.50 a unit. The second cost Rs 58.40. Same distance, nearly ten times the price. The cheaper call is not worse. At that close it would pay nothing, so every rupee of its price is time. The dearer one would pay 489.15 rupees at that close, and holds only 77.35 of time. Split any option price into those two parts and most of the confusion about premiums goes away. 3By the end you can 1. Say whether a call or put is in, at or out of the money from its strike. 2. Split an option price into intrinsic value and time value. 3. Explain why a cheap out of the money option is cheap. Watch in the terminal: value, invested and return A short tutorial on sample data. ## The idea, plainly Every option price has two parts. **Intrinsic value** is what the option would pay if it expired at the current index level. **Time value** is the rest: the price of what could still happen before expiry. Premium = intrinsic value + time value Intrinsic value comes from the strike and the index, and it is never below zero. Call: index less strike Put: strike less index Never below zero The strike against the index decides which side is in the money A call and a put at the same strike are never in the money together. At the money, both have almost only time value. Source: NISM, Series VIII Equity Derivatives, options unit. As of 16 Oct 2026. Read 2 more paragraphs, 196 words A call is **in the money** when its strike is below the index, because it would pay the difference if it expired now. A put is in the money when its strike is above the index. When the strike is nearest the future, the option is **at the money**, a rule from [module F17](/learn/path-15/module-15-1-reading-the-nse-option-chain). On this chain the future stood at 24,001.00, the spot at 23,989.15, and both point at the 24,000 strike. Every other strike is **out of the money** on one side and in the money on the other. An out of the money option has no intrinsic value, so its whole price is time value. The label belongs to the moment, not to the contract. The 24,000 call is at the money when the index sits near 24,000, in the money after a rally and out of the money after a fall. Nothing about the contract changes. Only the index moves. Traders also say *deep* in the money or *far* out of the money to say how far the strike is from the index. A deep option is mostly intrinsic value. A far one is all time value. ### Where the time value sits Look at the chain. Shaded cells are in the money. Every shaded price is large, because it carries intrinsic value. The unshaded prices fall away fast as the strike moves out. The thickest time value is at the money, where the outcome is least certain, and it thins in both directions. Shaded cells are in the money: they cost more because they carry intrinsic value | Calls | Strike | Puts | | --- | --- | --- | | Settle | Settle | | 488.00 | 23,600 | 89.95 | | 448.55 | 23,650 | 101.15 | | 413.30 | 23,700 | 113.85 | | 378.65 | 23,750 | 128.65 | | 344.45 | 23,800 | 144.75 | | 313.00 | 23,850 | 162.55 | | 282.90 | 23,900 | 182.10 | | 254.45 | 23,950 | 203.75 | | Spot 23,989.15 | | 227.05 | 24,000ATM | 226.25 | | 202.15 | 24,050 | 250.85 | | 178.75 | 24,100 | 277.30 | | 157.15 | 24,150 | 306.85 | | 137.35 | 24,200 | 335.90 | | 120.45 | 24,250 | 368.50 | | 105.25 | 24,300 | 403.70 | | 90.85 | 24,350 | 439.80 | | 78.15 | 24,400 | 474.60 | Shaded cells are in the money. OI is in units and volume is in contracts; L is lakh and Cr is crore. Settlement prices in rupees per unit for the Nifty 30 Jun 2026 expiry, as they stood on 16 Jun. Calls on the left, puts on the right. The row tagged ATM is nearest the future. Shading is measured from the spot. Source: NSE end of day data, computed by RupeeCase. As of 16 Jun 2026. Time value is widest at the strike and shrinks as expiry nears Price of the 24,000 call against the level of the future, from the Black 76 engine at the 16 Jun implied volatility, with 14, 6 and 1 days left. Nearly all of the one day curve is intrinsic value. Source: NSE end of day data, computed by RupeeCase. As of 16 Jun 2026. | Expiry | Days left | ATM strike | Call | Put | | --- | --- | --- | --- | --- | | 23 Jun 2026 | 7 | 24,000 | 154.40 | 171.35 | | 30 Jun 2026 | 14 | 24,000 | 227.05 | 226.25 | | 28 Jul 2026 | 42 | 24,100 | 409.55 | 407.85 | Read 4 more paragraphs, 203 words Time value also shrinks as expiry nears, reaching zero on expiry day, when only intrinsic value is left. The chart shows the 24,000 call at three points in its life. The curve with one day left sits almost on the expiry line. The curve with 14 days left rides well above it, and the gap is time value. On expiry day an option is worth its intrinsic value and nothing else. That is why the payoff charts in [module F11](/learn/path-14/module-14-1-call-option-explained) and [module F12](/learn/path-14/module-14-2-put-option-explained) have a hinge at the strike. Before expiry the price sits above the hinge by the time value. For a buyer, time value is a cost that runs down to zero. Intrinsic value is not a cost: it rises and falls with the index. More time means more time value, but not in proportion. The same day's at the money options for three expiries show it. For the two monthlies the at the money strike is the one nearest the future. The weekly has no future, so it is the one nearest the parity forward. The longest expiry has 6 times the days of the shortest and only 2.7 times the call price. Modules [F22](/learn/path-14/module-14-8-theta-time-decay) and [F15](/learn/path-14/module-14-5-what-moves-an-option-price) follow this further. ## Worked example: the 16 Jun 2026 chain, strike by strike Take the 30 Jun expiry chain as it closed on 16 Jun. The spot was 23,989.15. For each strike we split the settle price into its two parts, calls first. ITM, ATM and OTM mean in, at and out of the money. Intrinsic value is measured from the spot. | Call strike | Settle | Intrinsic | Time value | | --- | --- | --- | --- | | 23,500 ITM | 566.50 | 489.15 | 77.35 | | 24,000 ATM | 227.05 | 0 | 227.05 | | 24,500 OTM | 58.40 | 0 | 58.40 | | Put strike | Settle | Intrinsic | Time value | | --- | --- | --- | --- | | 23,500 OTM | 69.25 | 0 | 69.25 | | 24,000 ATM | 226.25 | 10.85 | 215.40 | | 24,500 ITM | 555.05 | 510.85 | 44.20 | Read 2 more paragraphs, 118 words At 24,000 the spot sits 10.85 below the strike, so the put has a sliver of intrinsic value and the call has none. Measured from the future, which was 24,001.00, the two would be almost equal. That is why the at the money row is a label by convention. Both options are nearly pure time value. A small oddity for readers who check the arithmetic. The 25,000 put settled at Rs 1,008.30, which is 2.55 below its intrinsic value of 1,010.85 measured from the spot. It is not an error. The future stands above the spot, the put is priced off the future, and the carry takes a little off a deep in the money put. 3 terms this section turns on From the module glossary; every term is in the Learn glossary too. Source: Module 14.4, Moneyness, intrinsic value and time value. ## The common mistake The claim: The out of the money call costs only a few rupees, so it is a cheap way to own the Nifty. Cheap in rupees is not cheap in odds. The 24,500 call cost Rs 58.40, Rs 3,796.00 a lot, and all of it is time value. To get that back by expiry Nifty had to close above 24,558.40, which is 2.37% above the close, in 14 days. The 23,500 call cost Rs 36,822.50 a lot and needed a rise of only 0.32%. The price is the market's answer to how likely the right is to pay. Low price, low odds. Judge a premium by what the index must do for it to be earned back. ## Key takeaways * Premium equals intrinsic value plus time value. * A call is in the money when its strike is below the index. * A put is in the money when its strike is above the index. * An out of the money option is all time value. * Time value is widest at the money and falls to zero at expiry. * Cheap in rupees is not cheap in odds. Watch in the terminal: what does "Same money in NIFTY 50" mean? A short tutorial on sample data. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) What does Moneyness, intrinsic value and time value cover?Every option price is intrinsic value plus time value. Split it, and ITM, ATM and OTM stop being jargon. It works through The idea, plainly, Worked example: the 16 Jun 2026 chain, strike by strike, The common mistake, Key takeaways. It is module 14.4 of Path 14, Options and Greeks, about 8 minutes of reading, free. TTry it ## Payoff builder, on the same example. Legs from a dated chain, the expiry and before expiry curves, breakevens and the charges. Dated NSE end of day data, nothing live, no orders. **Payoff builder**, Nifty, 16 Jun 2026, 30 Jun 2026 expiry. [Open the payoff builder](/learn/tools/payoff-builder?chain=NIFTY_2026-06-16_2026-06-30&preset=long-call) AF&O on RupeeCase ## Hedging only, in development F&O at RupeeCase will do one job: protect a portfolio you already own, by a rule published before it runs. No speculation, no naked option selling, no leveraged bets. It is not available yet. [How hedging will work](/hedging)[Sign up for RupeeCase](https://invest.rupeecase.com/signup) [No hedgeFalls with the marketWith a putA floor, for a premiumIllustration with made up numbers, not a product and not a recommendation.](/hedging) QQuick check ## 10 questions, 7 to pass. Each attempt draws 10 of the 15 questions in this module's bank, and a retake draws a fresh set. A pass gives this module's Certificate of Completion. Your result stays on this device and counts towards the Path 14 certificate. 7 of 10 correct passes module 14.4 Every answer is explained when you check; a retake is always free. Source: RupeeCase Learn quiz rules (70% to pass). Passed ### Certificate ID Download PNGPrint or save as PDF[Check the ID](/learn/certificates/verify) Self paced and unproctored. A record of completing free education by RupeeCase; not a NISM certificate and not endorsed by NISM, NSE, BSE or SEBI. It qualifies no one to deal, advise or publish research. CCheck yourself ## Path 14 so far. Your quick check results on this device, stop by stop. Stop 4 of 17 on Path 14 Options and Greeks: every live stop, this module ringed. Source: RupeeCase Learn, Path 14. 1. [14.1The call option, told as a storyNot yet](/learn/path-14/module-14-1-call-option-explained) 2. [14.2The put option, told as a storyNot yet](/learn/path-14/module-14-2-put-option-explained) 3. [14.3Buyer or seller: payoffs, margin, win rate and expectancyNot yet](/learn/path-14/module-14-3-option-buyer-vs-seller) 4. [14.4Moneyness, intrinsic value and time valueNot yet](/learn/path-14/module-14-4-moneyness-intrinsic-and-time-value#quiz) 5. [14.5Five things that move an option's priceNot yet](/learn/path-14/module-14-5-what-moves-an-option-price) 6. [14.6Expiry and settlement: cash, physical, exercise and STTNot yet](/learn/path-14/module-14-6-expiry-and-settlement) 7. [14.7Delta: speed, hedge ratio and the probability shortcutNot yet](/learn/path-14/module-14-7-delta) 8. [14.8Theta: the time decay curve into expiryNot yet](/learn/path-14/module-14-8-theta-time-decay) 9. [14.9From a binomial tree to Black Scholes and Black 76Not yet](/learn/path-14/module-14-9-binomial-tree-to-black-76) 10. [14.10Put call parity and synthetic positionsNot yet](/learn/path-14/module-14-10-put-call-parity) 11. [14.11Gamma: why it grows so fast near expiryNot yet](/learn/path-14/module-14-11-gamma) 12. [14.12Vega: volatility exposure across weekly and monthly expiriesNot yet](/learn/path-14/module-14-12-vega) 13. [14.13Rho and interest rates in Indian optionsNot yet](/learn/path-14/module-14-13-rho) 14. [14.14Position Greeks for multi leg strategiesNot yet](/learn/path-14/module-14-14-position-greeks) 15. [14.15Dynamic delta hedging and the P&L identityNot yet](/learn/path-14/module-14-15-delta-hedging) 16. [14.16Gamma scalpingNot yet](/learn/path-14/module-14-16-gamma-scalping) 17. [14.17Second order Greeks: vanna, volga, charm, speed and colourNot yet](/learn/path-14/module-14-17-second-order-greeks) 18. [TPath test, 30 questionsNot yet](/learn/path-14/module-14-17-second-order-greeks#pathTestSection) Path 14 in reading time: 149 minutes over 17 modules Minutes of reading per module, this one in amber. Source: RupeeCase Learn, Path 14. Explore next ## Put the module to work. * [Free module 14.1The call option, told as a story8 min read](/learn/path-14/module-14-1-call-option-explained) * [Free module 14.2The put option, told as a story8 min read](/learn/path-14/module-14-2-put-option-explained) * [Free module 14.5Five things that move an option's price8 min read](/learn/path-14/module-14-5-what-moves-an-option-price) * [Free module 14.6Expiry and settlement: cash, physical, exercise and STT8 min read](/learn/path-14/module-14-6-expiry-and-settlement) * [Free module 14.8Theta: the time decay curve into expiry7 min read](/learn/path-14/module-14-8-theta-time-decay) * [QuestionITM, ATM, OTM: what is intrinsic value and what is time value?A short answer with a dated chart](/learn/questions/itm-atm-otm-explained) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. New to RupeeCase? [Getting started](/getting-started) [See the terminal](/terminal) [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera SSources ## Go to the source. 5 sources, NSE the most cited The publisher of each source listed below. Source: Module 14.4 source list. 1. [NSE, option chain (Nifty 50 index options)](https://www.nseindia.com/option-chain) NSE 2. [NSE, equity derivatives contract specifications (lot size, expiry, strike intervals)](https://www.nseindia.com/static/products-services/equity-derivatives-contract-specifications) NSE 3. [NISM, Series VIII Equity Derivatives: test objectives (options unit)](https://www.nism.ac.in/revamp-nism/test-objectives-revised-nism-series-viii-equity-derivatives-certification-examination/) NISM 4. [SEBI Investor, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI 5. Hull, J., Options, Futures, and Other Derivatives, Pearson (properties of stock options) Book GTerms ## 5 terms from this module. Intrinsic valueWhat an option would pay if it expired at the current index level: index less strike for a call, strike less index for a put, never below zero. Time valueThe part of an option's price above its intrinsic value. It pays for what could still happen before expiry and falls to zero at expiry. In the moneyAn option with intrinsic value: a call whose strike is below the index, or a put whose strike is above it. At the moneyAn option whose strike is nearest the future. Its price is almost all time value. Out of the moneyAn option with no intrinsic value. Its whole price is time value. [All 230 terms in the glossary](/learn/glossary) [Question people askITM, ATM, OTM: what is intrinsic value and what is time value?A short answer with a dated chart](/learn/questions/itm-atm-otm-explained)[Related module14.1 The call option, told as a story8 min, Beginner](/learn/path-14/module-14-1-call-option-explained)[Related module14.2 The put option, told as a story8 min, Beginner](/learn/path-14/module-14-2-put-option-explained)[Pillar guideDerivatives and Quant115 modules across paths 12 to 19](/learn/derivatives) Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.