In June 2007, an investor buys a call option on Amgen stock with an exercise of price of
$65 and expiring in January 2009. If the stock price in June 2003 is $60, then this option is:
I. in-the-money
II. out-of-the-money
III. a LEAPS

Question

Quizplus · Accepted Answer

The option is out-of-the-money because the stock price ($60) is below the exercise price ($65). It is also a LEAPS because it has a long-term expiration date (more than one year).

In June 2007, an Investor Buys a Call Option on Amgen