A put option on dollars has a strike (exercise) price of £0.57. The present exchange rate is £0.58. This put option can be referred to as:
A) in the money.
B) out of the money.
C) at the money.
D) at a discount.

Question

Quizplus · Accepted Answer

A put option is "out of the money" when the strike price is below the current market price. Here, the strike price (£0.57) is less than the current exchange rate (£0.58).

A Put Option on Dollars Has a Strike (Exercise) Price