In the money(options)
The definition is "For call options, the option is said to be in-the-money if the share price is above the strike price." Why doesn't this take into consideration the price of the option? Shouldn't it be "if the share price is above (the strike price + the option price)"? With this definition, "in the money" does not mean the same as "you can make profit with it". Sorry, I know it is beginner's question.
One of the old concepts in options that's kinda fading away is "time value". That is, the option is worth something intrinsically because if you were forced to exercise it today, it would be worth $X. But the option is worth $Y>$X because of the fact that you're not on the hook for anything after a certain point if the trade moves against you.
So back to the point, an in-the-money option has intrinsic value while an out-of-the-money option is valuable only for its time value, not its intrinsic value.
Once you own the option, it's a sunk cost. Think about it that way.
When you say "option price" your referring to the premium right?
There is a difference between in the money and overall positive payoff. The concept of moneyness conventionally assumes no option premium or transaction cost.
interestingly enough, a stock can never trade above strike + premium. the max that a call can trade for is the stock's price.
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