What is moneyness in SAP IS-B-RA-MR - Market Risk Analysis?

SAP Term: moneyness

• Component: IS-B-RA-MR

• Component Name: Market Risk Analysis

• Description: Measure describing the extent to which an option is in-the-money. Moneyness is defined as follows: For calls: The strike of the option minus the spot of the underlying, divided by the spot of the underlying. For puts: The spot of the underlying minus the strike of the option, divided by the spot of the underlying.

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• Key Concepts: 
  Moneyness is a term used in the IS-B-RA-MR Market Risk Analysis component of SAP to describe the relationship between the current market price of an asset and its strike price. It is used to determine whether an option is in-the-money, at-the-money, or out-of-the-money. 
  
  How to use it: 
  In order to use moneyness in the IS-B-RA-MR Market Risk Analysis component of SAP, you must first enter the current market price and strike price of an asset. Once these values are entered, you can then determine whether the option is in-the-money, at-the-money, or out-of-the-money. 
  
  Tips & Tricks: 
  When using moneyness in the IS-B-RA-MR Market Risk Analysis component of SAP, it is important to remember that an option is considered in-the-money if the current market price is greater than the strike price. An option is considered at-the-money if the current market price is equal to the strike price. Finally, an option is considered out-of-the money if the current market price is less than the strike price. 
  
  Related Information: 
  For more information on moneyness and how it can be used in the IS-B-RA-MR Market Risk Analysis component of SAP, please refer to SAP's official documentation on the subject.