Question

Let X = strike price and S = share price. A put option is deep out-of-the-money if _____________ (choose the best answer from the list below to complete the sentence). a)X/S is between 1.06 and 1.15

b)X/S is between 1.01 and 1.05

c)X/S is equal to 1.00

d)X/S is between 0.95 and 0.99

e)X/S is between 0.85 and 0.94

Answer 1

A put option is out of the money when share price is greater than the strike price.

So, when Share price is much more than strike price, put option is said to be be in Deep out of money.

=> X<<<<S

So, from the given option, best possible option is X/S is between 0.85 and 0.94