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All main topics / Finance & Investment / Derivatives / Derivatives
159
18.Consider a put option and a call option with the same strike price and time to maturity. Which of the following is true?
A.It is possible for both options to be in the money
B.It is possible for both options to be out of the money
C.One of the options must be in the money
D.One of the options must be either in the money or at the money

Answer: D

If the stock price is greater than the strike price the call is in the money and the put is out of the money. If the stock price is less than the strike price the call is out of the money and the put is in the money. If the stock price is equal to the strike price both options are at the money.
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Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015

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