Asked by Marissa Aguilar on Jul 03, 2024
Verified
A 35 put option on ABC stock expires today. The current price of ABC stock is $36. The put is:
A) Funded.
B) Unfunded.
C) At the money.
D) In the money.
E) Out of the money.
Put Option
A financial contract giving the option buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time frame.
At the Money
A term used in options trading to describe a situation where the market price of the underlying asset is equal to the strike price of the option.
- Acquire insight into the specific conditions that result in options being in the money, at the money, or out of the money.
Verified Answer
ZK
Zybrea KnightJul 08, 2024
Final Answer :
E
Explanation :
A put option gives the holder the right to sell a stock at a specified price (the strike price). If the current stock price is above the strike price, as it is in this case ($36 vs. $35), the put option is considered "out of the money" because exercising the option would result in selling the stock for less than its current market value.
Learning Objectives
- Acquire insight into the specific conditions that result in options being in the money, at the money, or out of the money.