Which of the following statements is a true definition of an out-of-the-money option?
A) A call option in which the stock price exceeds the exercise price.
B) A call option in which the exercise price exceeds the stock price .
C) A call option in which the exercise price exceeds the stock price.
D) A put option in which the exercise price exceeds the stock price.
E) A call option in which the call premium exceeds the stock price.

Question

Which of the following statements is a true definition of an out-of-the-money option?
A) A call option in which the stock price exceeds the exercise price.
B) A call option in which the exercise price exceeds the stock price .
C) A call option in which the exercise price exceeds the stock price. 
D) A put option in which the exercise price exceeds the stock price.
E) A call option in which the call premium exceeds the stock price.

Quizplus · Accepted Answer

An out-of-the-money call option is one where the exercise price is higher than the current stock price, meaning it would not be profitable to exercise the option.

Which of the Following Statements Is a True Definition of an Out-Of-The-Money