[Verse 1]
Picture an option like a golden ticket
Holding two treasures wrapped inside
Intrinsic value - what you pocket
If you exercised it right now, no disguise
Time value whispers "wait a minute"
Clock is ticking, possibility's wide
[Chorus]
Moneyness tells the story clear
ITM - in the money, dear
ATM - at the money, here
OTM - out of money, fear
Intrinsic plus time equals all
Option's worth before it falls
[Verse 2]
Strike price fifty, stock at sixty
In the money, ten dollars real
That's intrinsic - concrete, gritty
Time value adds the future's deal
Premium paid exceeds intrinsic
Time decay makes holders kneel
[Chorus]
Moneyness tells the story clear
ITM - in the money, dear
ATM - at the money, here
OTM - out of money, fear
Intrinsic plus time equals all
Option's worth before it falls
[Bridge]
When strikes equal stock price exactly
At the money, zero intrinsic
Pure time value, actingstractly
Theta burns it, quite sadistic
Out the money? Zero intrinsic
Time alone makes premium stick
[Verse 3]
Call options need the stock ascending
Put options need the stock descending
Moneyness keeps on depending
Which direction price is trending
Calculate what's truly owed
Before expiration's final episode
[Chorus]
Moneyness tells the story clear
ITM - in the money, dear
ATM - at the money, here
OTM - out of money, fear
Intrinsic plus time equals all
Option's worth before it falls
[Outro]
Two components, crystal clean
Intrinsic plus the time between
Now and expiration's scene
Makes the option's value gleam