Specifically, the in-price option means that the exercise price of the option is lower than the current price of the underlying asset (for a call option) or higher than the current price of the underlying asset (for a put option). In this case, the holder can gain benefits by exercising. Therefore, the price of real options is usually higher than that of flat options and virtual options because they have intrinsic value.
Parity option means that the exercise price of the option is equal to the current price of the underlying asset. In this case, the intrinsic value of option is zero, and the value of option is mainly composed of time value. The price of flat options is usually between real options and virtual options.
Out-of-price option means that the exercise price of the option is higher than the current price of the underlying asset (for call option) or lower than the current price of the underlying asset (for put option). In this case, the intrinsic value of option is zero, and the value of option is mainly composed of time value. Therefore, the price of hypothetical options is usually lower than that of real options and average options.
In option trading, it is very important to understand the concepts of real value, flat value and imaginary value, because they can help traders better understand the changes of option price and risk. At the same time, these concepts can also be used to determine the arbitrage opportunity and risk-return ratio of options, thus helping traders make more informed investment decisions.