When the exercise price of a call option is higher than the current price of the stock, the option is said to be ________.
A) at-the-money
B) in-the-money
C) out-of-the-money
D) none of the above

Question

Quizplus · Accepted Answer

When the exercise (strike) price of a call option is higher than the current price of the stock, the option is said to be out-of-the-money. This is because the holder of the option would not exercise it and buy the stock at a higher price when they can buy it cheaper on the open market.

When the Exercise Price of a Call Option Is Higher