A put option on Swiss franc has a strike (exercise) price of $.92. The present exchange rate is $.89. This put option can be referred to as:
A) in the money.
B) out of the money.
C) at the money.
D) at a discount.

Question

​A put option on Swiss franc has a strike (exercise) price of $.92. The present exchange rate is $.89. This put option can be referred to as:
A) ​in the money.
B) ​out of the money.
C) ​at the money.
D) ​at a discount.

Quizplus · Accepted Answer

A put option is considered to be in the money when the strike price is higher than the current exchange rate. In this case, the strike price of $.92 is higher than the current exchange rate of $.89, which means that the put option is in the money.

​A Put Option on Swiss Franc Has a Strike (Exercise)

A Put Option on Swiss Franc Has a Strike (Exercise)