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Gordon is considering purchasing either a call or a put option on XYZ stock. Each of...

Gordon is considering purchasing either a call or a put option on XYZ stock. Each of the options has an exercise price of $40 and XYZ is trading at $44.50 per share. Which of the following statements about the options is correct?

Question 20 options:

The put option is in the money, whereas the call option is out of the money.

The call option is in the money, whereas the put option is out of the money.

Both the put and the call option are in the money.

Both the put and the call option are out of the money.
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Answer #1

Call Option is in the money option Because the Strike Price is less than the active Price of the underlying Stock and will be exercised if value of underlying Stock remains higher. While the Opposite is true for Put Option. the Strike Price is more than the value of underlying Stock so I wont exercise, therefore it is out of money.

Option 2 is Corect.

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