Question

A $32 put option on Watson Corporation stock expires today. The current price of the stock is $29.20. This option is:

a) funded.
b) unfunded.
c) at the money in the money.
d) out of the money.

Answer 1

The $32 put option is in the money because the holder can sell the stock at a higher price than the current market price of $29.20.

Step-by-step explanation:

The $32 put option on Watson Corporation stock allows the holder to sell the stock at a price of $32.

Given that the current price of the stock is $29.20, the holder of the put option can sell it for more than the current market price, making a profit.

Therefore, this option is in the money, as the exercise price is higher than the current stock price.