Which of the following phrases is used to describe an option where immediate exercise results in a negative payoff?
A) At-the-money
B) In-the-money
C) Near-the-money
D) Out-of-the-money

Question

Quizplus · Accepted Answer

An option is "out-of-the-money" when exercising it immediately would result in a negative payoff, meaning the strike price is not favorable compared to the current market price.

Which of the Following Phrases Is Used to Describe an Option