what is near the money 
the phrase near the money refers to an options contract whose strike price is close to the current market price of the corresponding underlying security near the money is synonymous with at the money it is very seldom that the underlying asset s price will be exactly at the strike price so near the money is used and the strike price can be higher or lower than the market price close to the money is an alternative phrase designating the same situation it is very close to being at the money atm but not quite the same a call option is considered in the money itm if its strike price is lower than the market price however if the strike price is higher than the market price it would be out of the money otm a put option s moneyness would work in opposite direction also the option s premiums would need to be accounted for before it can be deemed to be in the money near the money is one of the states of option moneyness along with in the money and out of the money otm understanding near the moneyan options contract is said to be near the money when the strike price or the price at which the option can be exercised and the underlying security s price are close while there is no official figure for close if that difference is usually less than 50 cents the options contract is considered near the money for example an option with a current market value of 20 and a strike price of 19 80 would be considered near the money as the difference between the strike price and the market value is only 20 cents a contract is considered at the money when the strike price is equal to the market price of the underlying security the term near the money is often used to mean the same thing as at the money because it is rare for options prices to be at the money or the same as the strike price of the commodity in question for this reason options trading almost always uses near the money or nearest the money options rather than at the money options at or near the money options contract typically cost more i e they have a higher premium than out of the money options in which the underlying instrument s price is significantly higher or lower than the strike price near the money options contain intrinsic value if they are slightly out of the money but can contain both intrinsic and extrinsic value if they are slightly in the money near the money vs at the moneysince it is so rare for an options price to line up exactly with the strike price for that stock almost all at the money options trades will take place near the money instead most traders attempt to trade options when they are in the money so that they can pay less than the current market price for the stock and make a profit 