A put option on British pounds has a strike (exercise) price of $1.57. The present exchange rate is $1.53. 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

Quizplus · Accepted Answer

A put option is in the money if the strike price is above the current market price. In this case, the strike price is $1.57, while the current exchange rate is $1.53. Therefore, the put option is in the money.

A Put Option on British Pounds Has a Strike (Exercise)