The current market price of a share of CSCO stock is $22.If a put option on this stock has a strike price of $20, 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 $25.
D)is out of the money and sells for a higher price than if the strike price of the put option was $25.

Question

Quizplus · Accepted Answer

A put option is out of the money when the market price of the stock is above the strike price. Since the market price ($22) is above the strike price ($20), the put is out of the money.

The Current Market Price of a Share of CSCO Stock