What is Close to the Money?
Close to the money involves a situation where the strike price for the underlying security for an option contract is almost identical to the current market price associated with the option. Generally, the investor will look for investments where strike prices are slightly lower than the current market prices. This approach helps the purchase to be profitable from the moment that the deal is executed. Considering option contracts that are close to the money can be a relatively lucrative way to acquire options at good prices and generate a consistent return for the investment portfolio. Options that tend to exhibit a market price that is very close to the strike price have a tendency to be very stable, and often are upwardly mobile. While a close to the money option may not ever experience a drastic rise in value, the incremental increase in value over time can make the acquisition well worth the time and effort. There is some difference of opinion on how close the strike and market pric
