A put option on British pounds has a strike (exercise) price of $1.48. The present exchange rate is $1.55. 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 in the money if the strike price is above the current market price, which is not the case here since the strike price ($1.48) is below the present exchange rate ($1.55). Therefore, the put option is out of the money.

A Put Option on British Pounds Has a Strike (Exercise)