A stock currently sells for $75 per share. A put option on the stock with an exercise price of $70 currently sells for $0.50. The put option is
A) at-the-money.
B) in-the-money.
C) out-of-the-money.
D) at breakeven.
E) above-the-money.

Question

Quizplus · Accepted Answer

A put option is considered "out-of-the-money" when the stock price is above the exercise price. In this case, since the stock price ($75) is higher than the exercise price ($70), the put option is out-of-the-money.

A Stock Currently Sells for $75 Per Share