Based on the relationship between the strike price and the current price, an option may be at-the-money, out-of-the-money or in-the-money.Which of the following statements is true?
A)A Call Option is out-of-the-money when the strike price is greater than the current price.
B)A Put Option is in-the-money when the strike price is greater than the current price.
C)A Put Option is out-of-the-money when the strike price is less than the current price.
D)All of the above are true.

Question

Based on the relationship between the strike price and the current price, an option may be at-the-money, out-of-the-money or in-the-money.Which of the following statements is true?
A)​A Call Option is out-of-the-money when the strike price is greater than the current price.
B)​A Put Option is in-the-money when the strike price is greater than the current price.
C)​A Put Option is out-of-the-money when the strike price is less than the current price.
D)​All of the above are true.

Quizplus · Accepted Answer

Each statement correctly describes the relationship between the strike price and the current price for options. A call option is out-of-the-money when the strike price is above the current price, making it not beneficial to exercise. A put option is in-the-money when the strike price is above the current price, as it would be profitable to sell the underlying asset at the higher strike price. Similarly, a put option is out-of-the-money when the strike price is below the current price, as it would not be beneficial to sell the underlying asset at the lower strike price.

Based on the Relationship Between the Strike Price and the Current