if i buy a call with a strike price below the current market price, could I sell it immediately for a profit? How does a strike price below the current market price work.

4 Answers 4


ITM options have intrinsic value. For call options, this means the strike price is below the current market price of the underlying asset.

If you bought a call option with a strike price that’s below the current market price, you have the right to purchase the underlying asset at a price that’s less than its current market value. This difference between the market price and the strike price represents the intrinsic value of the option. but remember you can only exercise your right at the time of expiry and the above condition might change over time.

Here’s a simplified formula for the profit from an in-the-money call option:

profit = (cmp − strike price) − premium paid

cmp = current market price.

you should put your nos to calculate the profit and make the call accordingly.

  • 1
    "...but remember you can only exercise your right at the time of expiry ." American style options can be exercised at any time Commented Apr 13 at 23:29

The price for such a call would be the difference between market price and strike price.... PLUS a premium for the time value of the option. The time value can be described as a premium for an even higher market price before the option expires. There is a difference between US and EU options in the ability to exercise.

So no, you won't make an immediate profit. Plus you're probably going to have to pay some fees.

  • 5
    Note that "American" and "European" options are purely conventional terms and have no direct bearing to "US" and "EU".
    – D Stanley
    Commented Apr 11 at 13:08

In order to make a profit with a long option, the premium that you get for selling it must be higher than what you paid for it. It doesn't matter whether it's an in-the-money, at-the-money, or out-of-the-money option.

In order for the above to happen, either the price of the underlying must move favorably in your direction (up for a long call and down for a long put) and/or, there must be an increase in implied volatility.


MarketUV called it out well. Its a simple formula ITM call buy option -

profit = (curret market price − strike price) − premium paid

Had it been ITM call that you have sold, you should have exit immediately.

  • 1
    If there is already an answer that says it well, please don't add another answer saying the same thing. Commented Apr 13 at 10:11

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