Whoops. ITM is in the money. Does $2.83 ITM mean it's worth $2.83 more than at the time of purchase (since it was OTM at the time of purchase in this case)? I got confused by what Don87109 said.
I'm confused. What does being $2.83 ITM mean? Can you help me out while I wait for those penurious option MM's to toss me a few cents more (yawn)?
You need to look at the April 56 put to approximate what the April 53 put would be worth if the QQQQ's dropped $3. I think the April 56 put closed at about 1.36 around closing time. One other point, always use the bid/ask price not the last transaction price (that could be very old). As the others have said a modeling program is best for determining future prices, but this technique is good for a quick estimate. Although maybe it's better used by experienced option traders since it's easy to get confused. Don