How many of the January 2009 call options are out-of-the-money?
A)0
B)1
C)2
D)3
E)4

Question

Quizplus · Accepted Answer

An option is considered out-of-the-money if the strike price is higher than the current market price for a call option or lower than the current market price for a put option. In this case, the current market price (or spot price) of the stock is $36. Therefore, the January 2009 call options with strike prices of $37 and $38 are out-of-the-money, while the options with strike prices of $35 and $36 are in-the-money. Option A is incorrect because there are two out-of-the-money options. Option B is incorrect because there is more than one out-of-the-money option. Option D and E are incorrect because there are not four or more out-of-the-money options.

How Many of the January 2009 Call Options Are Out-Of-The-Money