Asked by Kaitlyn Foley on May 10, 2024
Verified
An option with an exercise price equal to the underlying asset's price is
A) worthless.
B) in the money.
C) at the money.
D) out of the money.
E) theoretically impossible.
Exercise Price
The cost that an option holder is allowed to pay to acquire (if it's a call option) or dispose of (if it's a put option) the base security or commodity.
Underlying Asset's Price
The current market price of the security or commodity that is the basis for a derivative contract, such as options or futures.
Option
A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.
- Gain insight into the elementary concepts of options, including calls and puts.
Verified Answer
JC
Joycella CornejoMay 11, 2024
Final Answer :
C
Explanation :
An option with an exercise price equal to the underlying asset's price is considered "at the money," meaning the option's strike price is equal to the market price of the underlying asset.
Learning Objectives
- Gain insight into the elementary concepts of options, including calls and puts.