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A put option on Japanese yen has a strike (exercise) price of $.012. The present exchange...

A put option on Japanese yen has a strike (exercise) price of $.012. The present exchange rate is $.011. This put option can be referred to as:?
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Answer #1

A put option is an option to sell the underlying asset at the strike price on maturity. So, a put option holder will exercise the option only if the market price on maturity is less than the strike price. Therefore, a put option will be 'In the money', if Strike price is higher than the market price, 'Out of the money' if Strike price is lower than the market price and 'At the money' if strike price equals the marke price.

In the present case, since Strike price of $0.012 is higher than market price of $0.011, the put option is In the Money.

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