Which of the following options are in the money?
A) Price of the underlying = $17; Exercise price of the put option = $16
B) Price of the underlying = $20; Exercise price of the put option = $28
C) Price of the underlying = $30; Exercise price of the call option = $45
D) Price of the underlying = $30; Exercise price of the call option = $30
E) Price of the underlying = $35; Exercise price of the call option = $45

Question

Quizplus · Accepted Answer

An option is "in the money" if exercising it would result in a positive cash flow. For a put option, this means the exercise price is higher than the current price of the underlying asset. Option B is in the money because the exercise price ($28) is higher than the current price ($20), meaning the holder could sell the underlying asset at a higher price than its current market value.

Which of the Following Options Are in the Money