In The Money

This term is used in binary options to describe the event in the closure point of a position which marks a winning trade.

There are three scenarios for the outcome of an option: ‘In The Money’ (meaning the trader has made a profit on top of the initial investment), ‘Out Of The Money’ (signifying the loss of an investment), and ‘At The Money’, meaning the trader has neither lost nor won due to the expiry rate being the same as the strike rate.

When trading binary options, in the event of an expiry price being superior to the strike price, a Call option is thus said to be In the Money. The same can be said of a Put option when the expiry price is lower than the strike price.

For example, if a Call option is placed on the EUR/USD pair at the opening rate of 1.3535 and the option’s closing rate is 1.3536 (1 pip higher), the option is a winning one and is therefore In The Money.

Likewise, if a Put option is placed on the EUR/USD pair at the opening rate of 1.3535 and the option’s closing rate is 1.3534 (1 pip lower), the option is In The Money and the trader wins.