The document discusses options and moneyness in derivative markets. It defines options as contracts that give the buyer the right to buy or sell an underlying asset at a specified strike price on or before an expiration date. It describes the two main types of options - call options, which allow buying the underlying asset, and put options, which allow selling the underlying asset. It also discusses American and European options and their differences in terms of exercise dates. Finally, it defines moneyness and the three categories of in-the-money, at-the-money, and out-of-the-money options based on the relationship between the current underlying price and the strike price.

1. OPTIONS AND MONEYNESS IN
DERIVATIVE MARKET
PRESENTED BY
SAI YASHWANTH-22BSPDD01C045
SAI BHARATH REDDY-22BSPDD01C040

2. Understanding Options
Options are a type of derivative contract that gives the buyer the right,
but not the obligation, to buy or sell an underlying asset at a specified
price on or before a certain date. The underlying asset can be a stock,
bond, commodity, currency, or index. The specified price is called the
strike price, and the date is called the expiration date

3. TYPES OF OPTIONS
• Call options give the buyer the right to buy the underlying asset at the
strike price on or before the expiration date. If the price of the
underlying asset rises above the strike price, the buyer can exercise the
option and buy the asset at a profit. If the price of the underlying asset
falls below the strike price, the buyer can let the option expire, and they
will not have to buy the asset.
• Put options give the buyer the right to sell the underlying asset at the
strike price on or before the expiration date. If the price of the
underlying asset falls below the strike price, the buyer can exercise the
option and sell the asset at a profit. If the price of the underlying asset
rises above the strike price, the buyer can let the option expire, and they
will not have to sell the asset.

4. AMERICAN V/S EUROPEAN OPTIONS
American options can be exercised at any time between the date of purchase
and the expiration date .
European options are different from American options in that they can only
be exercised at the end of their lives on their expiration date.

5. INTRODUCTION TO MONEYNESS
Moneyness refers to relationship between current price of underlying asset and
strike price of an option. It categories options as in money, at the money and out
of the money influencing their pricing and potential for profit.

7. TYPES OF MONEYNESS
• In the money (ITM): An option is considered to be ITM if its
strike price is below the current price of the underlying
asset for a call option, or above the current price for a put
option.
• At the money (ATM): An option is considered to be ATM if its
strike price is equal to the current price of the underlying asset.
• Out of the money (OTM): An option is considered to be OTM
if its strike price is above the current price of the underlying
asset for a call option, or below the current price for a put
option.

10. CONCLUSION
In conclusion,, the intricate relationship between options and moneyness is a
fundamental aspect of derivatives trading.. A comprehensive understanding of
moneyness dynamics is indispensable for investors seeking to navigate the
complexities of options markets and make informed trading decisions

11. Thank
You