Which of the following is an example of a call option that is "out of the money"?
A)option to sell at $11, stock is worth $12
B)option to buy at $13, stock is worth $12
C)option to buy at $12, stock is worth $12
D)option to sell at $13, stock is worth $12

Question

Quizplus · Accepted Answer

An option is considered "out of the money" if exercising it would result in a loss for the holder. In this case, a call option to buy at $13 when the stock is only worth $12 means that the holder would have to pay more for the stock than it's currently worth, resulting in a loss.

Which of the Following Is an Example of a Call