A stock option is said to be "out of the money" if the
A) strike price equals the exercise price.
B) stock price equals the strike price.
C) strike price exceeds the stock price.
D) stock price exceeds the strike price.

Question

Quizplus · Accepted Answer

When the strike price exceeds the stock price, the option is considered "out of the money." This means that exercising the option at the current stock price would result in a loss, as the option holder would have to purchase the stock at a higher price than the current market value.

A Stock Option Is Said to Be "Out of the Money