If the price of the common stock is below the exercise price of a put contract on the stock the put is said to be:
A) at the money.
B) out of the money.
C) in the money.
D) covered.

Question

Quizplus · Accepted Answer

When the price of the common stock is below the exercise price of a put contract, the put is considered "in the money" because the holder can sell the stock at the higher exercise price than the current market price, making a profit.

If the Price of the Common Stock Is Below the Exercise