Reviewed by: R. Saikiran. This guide is written for candidates who want a quick but practical revision note before attempting mock tests.
Call Options
A call option is in-the-money when the underlying price is above the strike price because it has intrinsic value.
Put Options
A put option is in-the-money when the underlying price is below the strike price because the right to sell at the strike is valuable.
Exam Tip
Do not mix calls and puts. First identify option type, then compare spot and strike.
Key Terms to Remember
- options moneyness
- ITM
- ATM
- OTM
- call option
- put option
How to Practise
After reading this guide, attempt the related mock-test sets and review the explanations for skipped or incorrect questions. The goal is not memorising one answer, but recognising the concept in new scenarios.
Common Mistakes
Candidates often rush through familiar terms and miss the exact condition in the question. Slow down when the question includes time period, client profile, product type, regulatory role, risk level, or calculation data.
Revision Checklist
- Understand the core definition.
- Know where the topic appears in the exam category.
- Practise at least one related mock set.
- Review every wrong and skipped answer.
- Verify current rules through official sources where regulation is involved.