ITM, OTM, and ATM

ITM (in-the-money), OTM (out-of-the-money), and ATM (at-the-money) describe where a stock's price sits relative to an option's strike. A call is ITM when the stock trades above the strike and OTM when it trades below; a put is the reverse. ATM means the strike sits at, or very close to, the current stock price. An ITM option has real intrinsic value; an OTM option has none, so its whole premium is time value — and these labels shift as the stock moves, right up until expiration. Being ITM doesn't automatically mean a trade is profitable overall; it only describes the option's value relative to the strike, not relative to what you originally paid.