A call option on a stock is said to be at the money if
A)the exercise price is higher than the stock price.
B)the exercise price is less than the stock price.
C)the exercise price is equal to the stock price.
D)the price of the put is higher than the price of the call.

Question

Quizplus · Accepted Answer

A call option is said to be at the money when the exercise price is equal to the stock price. This means the option has not yet moved into a position of profitability, as the investor paid a premium for the right to buy the stock at the current market price. If the stock price were to increase, the call option would become in-the-money. If the stock price were to decrease, the call option would become out-of-the-money. Therefore, at-the-money options are considered to be neutral or non-directional.

A Call Option on a Stock Is Said to Be