If a currency call option is in the money, then the present exchange rate exceeds the strike price.

Question

Quizplus · Accepted Answer

A call option gives the holder the right, but not the obligation, to buy a currency at a predetermined strike price. If the current exchange rate is higher than the strike price, the option is considered in the money as exercising the option would allow the holder to buy the currency at a discount to the current market rate.

If a Currency Call Option Is in the Money, Then