Gordon Is Considering Purchasing Either a Call or a Put

question 57

Multiple Choice

Gordon is considering purchasing either a call or a put option on XYZ stock. Each of the options has an exercise price of $40 and XYZ is trading at $44.50 per share. Which of the following statements about the options is correct?

• A) The put option is in the money, whereas the call option is out of the money.
• B) The call option is in the money, whereas the put option is out of the money.
• C) Both the put and the call option are in the money.
• D) Both the put and the call option are out of the money.

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Definitions:

Domestic Usage

Practices or norms followed within a specific country, industry, or community, especially in the context of trade or contractual agreements.

Easement

A legal right to use another's land for a specific, limited purpose, such as a pathway or utility line access.

Right Of Way

The Right of Way refers to the legal right, established by usage or grant, to pass along a specific route through grounds or property belonging to another.

Life Estate

A property interest held by an individual only for the duration of their life, after which the property reverts to another designated person or entity.