A put option with a strike price being above the combined amount of its underlying’s market price and the premium, at a given point over/ within its time to maturity (for American options) or at expiration date (for European options).

For example, an American put option with a strike price of $15 and a premium of $3 will be in the money if its underlying assets is currently trading at $11, since its strike price is above the summation of its underlying price and premium:

Strike price > underlying price + premium

15 > 11+ 3

15 > 14

From the perspective of the option’s holder (the long), exercising the in-the-money put will be feasible as it leads to the sale of the underlying at the strike price which is higher than the option’s cost and the market price of its underlying. If such a sale takes place, it would result in one dollar gain for every unit of the underlying. And for an option contract involving 100 shares, for example, the gain would accumulate to $100.