Question

Which one of the following options is out of the money?

a. call with a $20 strike and a stock price of $21
b. put with a $35 strike and a stock price of $33
c. call with a $45 strike and stock price of $46
d. put with a $75 strike and a stock price of $70
e. call with a $50 strike and a stock price of $49

Answer 1

The answer to the question of which option is out of the money is the call with a $50 strike price and a stock price of $49.

Step-by-step explanation:

When evaluating options, an option is considered out of the money (O T M) if it does not have intrinsic value.

For a call option, this means the stock price is below the strike price, and for a put option, it means the stock price is above the strike price.

In the provided options, the only one that is O T M would be a call option with a $50 strike price when the stock price is $49.

Since the stock price is below the strike price, rendering the option without intrinsic value.