in-the-money
out-of-the-money
out-of-the-portfolio
in-the-portfolio
Answer is Right!
Answer is Wrong!
The correct answer is A. in-the-money.
An option is in-the-money if the strike price is less than the current price of the underlying asset. This means that the option holder would be profitable if they exercised the option.
An option is out-of-the-money if the strike price is greater than the current price of the underlying asset. This means that the option holder would not be profitable if they exercised the option.
An option is at-the-money if the strike price is equal to the current price of the underlying asset. This means that the option holder would be indifferent to exercising the option.
An option is out-of-the-portfolio if it is not currently held by the investor.
I hope this helps!