From The Jolly Contrarian
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| “[[Moneyness]]” is a measure of how well a bargain you struck is working out, right now. If it was a good investment, you’re [[in the money]]. If it wasn’t, you’re [[out of the money]].
| | Moneyness of a crappy kind. Time value but no intrinsic value to your option. |
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| The cleanest examples hail from the world of betting (also known, for those in the three-piece suits, as [[derivatives]]).
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| If you bet your buddy £100 that England would beat Germany in a football match, there are three minutes left of injury time England are trailing 6-0, you are badly [[out-of-the-money]]. You haven’t ''exactly'' lost the bet — not ''yet'' — but if you wanted to call off the bet, your chum would be asking “well, what’s it worth to you, old fellow?”
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| By contrast, your compadre is [[in-the-money]] by a similar amount. All the more galling because, when you started, you were both [[at-the-money]]. But, really, what were you thinking?
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| {{moneyness}} | | {{moneyness}} |
Revision as of 13:36, 25 February 2019
Moneyness of a crappy kind. Time value but no intrinsic value to your option.
See also