How to judge an option strike as OTM/ITM, deep OTM/ITM etc

Hi friends,

We can know the ATM strikes which are close to the Spot price. Similarly on what basis can we
call a strike OTM,ITM, deep OTM deep ITM etc ? What should be price difference to categorize them ?

Please help @nithin


A quick read through Varsity should help.


Thanks bro i have gone through the varsity but i want to know deep OTM and slight OTM ?
lets consider the case of call options.
spot is 4000 and 1. Strike is 3800. Its ITM but how to know it’s deep ITM or slight ITM ?
Is there any specific rule to decide that ? My concern is to know that.

it depends on you want to sell / buy option go with z analysis.

@Pushkar_Singh : z analysis ? what is that and how to get it bro ?

You might want to consider the different strikes as different steps. And further the step is from the ATM, deeper that strike is. For example, the spot is at 4000, so 3800 put is OTM, but 3700 is one step further down, therefor it is even more deep OTM and 3500 strike put is even deeper OTM and so on. This is relative concept, there are no fixed universal rules in this. Different platforms might use different settings for labeling a particular strike as OTM and deep OTM etc.

I hope you get the point.
Best Regards

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@4autotrading : Thanks bro

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