What is an option that's in the money?

An option that's in the money is an option that presents a profit opportunity due to the relationship between the strike price and the prevailing market price of the underlying asset. An in-the-money call option means the option holder can buy the security below its current market price.

Are out-of-the-money options better than money options?

The main exception is very deep in the money options, where the extrinsic value makes up a tiny fraction of the total value. Exercising call options becomes more practical as expiration approaches and time decay increases dramatically. While in the money options are more likely to turn a profit, out-of-the-money options are much cheaper to buy.

Why is the moneyness of an option always included in its premium?

The moneyness of an option is always included in its premium (price) because being in the money gives an option intrinsic (real) value. An option’s premium is based on three things—its moneyness, the amount of time remaining until its expiration, and the volatility of the underlying asset.