When an option expires ‘In the Money’ the option is fulfilled as the trader’s estimate was correct. Here are some examples of options that expire ‘In the Money’:
– A High/Low instrument where a low option expires below the target price or a high option expires above the target price.
– A One Touch instrument where a touch option expires due to reaching the target price or a no-touch option where the target price is not reached before the expiry time.
– A Boundary instrument where an outbound option expires below the lower target price or above the upper target price or an inbound option expires between the target prices.
When an option expires ‘Out of the Money’ the option is not fulfilled as the trader did not successfully predict the outcome, therefore the investment is forfeited.