Groundlearn / Glossary / Moneyness
Moneyness
A CFA term, defined in plain English with the distinction examiners test.
What it means
Whether exercising an option now would pay: in-the-money, at-the-money or out-of-the-money.
The exam angle
Intrinsic value is what exercise would yield today; time value is everything else in the premium, and it decays to zero at expiry.
Where it appears in the syllabus
- DerivativesCFA Level I · exam weight 6–9% · Forwards, futures, swaps, options and arbitrage-free pricing.
Related terms
- Basis riskThe risk that a hedge and the exposure it hedges do not move together, leaving a residual.
- Black–Scholes–Merton modelA closed-form model for European option prices, assuming lognormal prices, constant volatility and continuous…
- Call optionThe right, without the obligation, to buy an asset at the strike price by expiry.
- Cash flow additivityThe principle that the value of a set of cash flows equals the sum of the values of its parts, so two ways of reaching…
- Contango and backwardationContango is a futures price above the spot price; backwardation is a futures price below it.
- Covered callHolding the underlying and writing a call against it, collecting the premium in exchange for capping the upside.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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