Question

1. A call option with a strike price of $35 on ABC stock expires today. The current price of ABC stock is $30. The call is:

2. A put option with a strike price of $35 on ABC stock expires today. The current price of ABC stock is $30. The put is:

a. at the money

b. out of the money

c. in the money

d. none of the above

Answer 1

This is known as Moneyness of an option . This relates to current stock price w.r.t strike price

Where S is the Stock Price and E is the Strike Price

1. The Correct answer is Out of the money

Strike Price = $35

Stock Price = $30

As S < E the call is Out of the money.

2.   The Correct answer is In the money

Strike Price = $35

Stock Price = $30

As S < E the put is In of the money.