Asked by Darian Appelt on May 10, 2024
Verified
A call option on a stock is said to be in the money if
A) the exercise price is higher than the stock price.
B) the exercise price is less than the stock price.
C) the exercise price is equal to the stock price.
D) the price of the put is higher than the price of the call.
E) the price of the call is higher than the price of the put.
Call Option
A financial contract granting the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.
Exercise Price
The price at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.
- Obtain a comprehensive grasp of the categories of in the money, at the money, and out of the money options.
- Distinguish between put and call options and their market behaviors.
Verified Answer
RF
Regan FiffikMay 14, 2024
Final Answer :
B
Explanation :
A call option is considered in the money when the stock price is above the exercise price, allowing the option holder to buy the stock at a price lower than the current market price.
Learning Objectives
- Obtain a comprehensive grasp of the categories of in the money, at the money, and out of the money options.
- Distinguish between put and call options and their market behaviors.