The current market price of a share of a stock is $20.If a put option on this stock has a strike price of $18, the put
A)is out of the money.
B)is in the money.
C)sells for a higher price than if the strike price of the put option was $23.
D)is out of the money and sells for a higher price than if the strike price of the put option was $23.

Question

Quizplus · Accepted Answer

A put option is out of the money when the strike price is below the current market price of the stock. Since the strike price is $18 and the market price is $20, the put option is out of the money.

The Current Market Price of a Share of a Stock