Which one of the following combinations creates an in-the-money option?
A)underlying stock price is less than the strike price of a call
B)underlying stock price is $18 and the put has an exercise price of $15
C)underlying stock price is $22 and the call has an exercise price of $25
D)put strike price exceeds the underlying stock price
E)put price is equal to the call price

Question

Quizplus · Accepted Answer

An in-the-money option for a put means that the strike price is above the current market price of the underlying asset, allowing the holder to sell the asset at a price higher than the current market price. Option D directly describes this scenario, making it the correct choice.

Which One of the Following Combinations Creates an In-The-Money Option