The current market price of a share of CSCO stock is $75. If a put option on this stock has a strike price of $70, the put
A) is out of the money.
B) is in the money.
C) sells for a higher price than if the market price of CSCO stock is $70.
D) is out of the money and sells for a higher price than if the market price of CSCO stock is $70.
E) is in the money and sells for a higher price than if the market price of CSCO stock is $70.

Question

Quizplus · Accepted Answer

A put option is considered "in the money" when the strike price is above the market price of the stock. Since the market price ($75) is higher than the strike price ($70), the put option is "out of the money."

The Current Market Price of a Share of CSCO Stock