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Question

When the spot price of a Call Option is less than the strike Price of an Option, the Option is said to be _______

A In-the Money Option Correct Answer Incorrect Answer
B At-The money Option Correct Answer Incorrect Answer
C Out of the money Option Correct Answer Incorrect Answer
D European Option Correct Answer Incorrect Answer
E American Option Correct Answer Incorrect Answer

Solution

  In the case of a call option when the spot price (market price at present) is less than the strike (exercise price) then the option is said to be out of the money and will not be exercised by the option holder. As the holder can get the underlying asset at a lower price from the market rather than through the call option.

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