Question
In: Finance
An option is said to be “in‐the‐money” if its value is positive. True or False
- An option is said to be “in‐the‐money” if its value is positive. True or False
Solutions
Expert Solution
Sol:
An option is said to be “in‐the‐money” if its value is positive is True.
Answer is True.
Option can be call or put option. If the price of the underlying stock is above the strike price of call option, then the option is in the money and will have a positive value. If the price of the underlying stock is below the strike price of call option, then the option is out of the money and will have a negative value. The price of an option bought will never have a negative value.
On the other hand if the price of the underlying stock is below the strike price of put option, then the option is in the money and will have a positive value. If the price of the underlying stock is above the strike price of put option, then the option is out of the money and will have a negative value.
jeff jeffy answered 1 year agoRelated Solutions
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true or false
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at a time. this reduces the risk to equity investors in the
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