Guwahati, Sept. 22 -- When trading options, selecting the appropriate strike price can be just as important as deciding whether to buy a call or put. Two options with the same expiry can behave very differently simply because their strike prices are different.

This is where ITM, ATM and OTM options come in. These terms describe an option's relationship with the current price of its underlying asset. Understanding the difference can help traders choose contracts based on their market view, risk tolerance and trading objective.

Suppose an index is trading at 25,000.

For a call option:

ITM (In the Money): A strike below 25,000, such as 24,800.

ATM (At the Money): A strike closest to the current market price, such as 25,000.

OTM (Out of...