Question

Which one of the following options is out-of-the-money? call with a $20 strike and a stock...

Which one of the following options is out-of-the-money?

call with a $20 strike and a stock price of $21

put with a $35 strike and a stock price of $33

call with a $45 strike and stock price of $46

put with a $75 strike and a stock price of $70

call with a $50 strike and a stock price of $49
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Answer #1

Answer: call with a $50 strike and a stock price of $49

A call option is in the money when Stock price is greater than the Strike price. In option 1 and 3, stock price > strike price and hence they are in the money. In option 5, stock price < strike price and hence that is out of money.

A put option is in the money when stock price is less than the Strike price. In option 2 and 4, stock price is less than stock price and hence both are in the money options.

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