When a share of a company's stock is selling for $55.00, a call option on the stock with a strike price of $56.00 is said to be:

Question

Quizplus · Accepted Answer

A call option with a strike price higher than the current stock price ($56.00 vs. $55.00) is considered "out of the money" because exercising the option would not be profitable; the stock can be bought cheaper on the open market than through the option.

When a Share of a Company's Stock Is Selling for $55.00