In June 2017, an investor buys a put option on Genentech stock with an exercise price of $75 and expiring in January 2019.If the stock price in July 2017 is $80, then this option is
A)in-the-money.
B)out-of-the-money.
C)a LEAPS option.
D)out-of-the-money and a LEAPS option.

Question

Quizplus · Accepted Answer

The option is out-of-the-money because the stock price ($80) is above the exercise price ($75). It is also a LEAPS option because it has a long-term expiration date (more than one year from the purchase date).

In June 2017, an Investor Buys a Put Option on Genentech