Question

based on the following options data for XYZ Corporation:

             ------Call------ or------Put------

Market price   Strike   Exp.    

38.625 25 Dec.   

             38.625               30     Nov.

             38.625               30     Dec.   

             38.625               35     Nov.

             38.625               35     Dec.   

             38.625               35     Mar.   

             38.625               40     Nov.

1.         Which of the above calls is not “in-the-money?”

2.         Of the various combinations shown above, how many combinations of put contracts are currently trading “out-of-the-money?”

Answer 1

Solution:

The spot price is $38.625

For a call option, in-the-money call option are those options where Spot price > Strike price

1. Hence all the given call options are in the money except for $40 strike November

2. For put option only 40 Nov option is in-the-money, the rest 6 options are out the money. For put option all the options where Strike < Spot price are out the money