Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Let X = strike price and S = share price. A put option is deep out-of-the-money if _____________ (choose the best answer from the list below to complete the sentence).
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X/S is between 1.01 and 1.05 |
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X/S is between 1.06 and 1.15 |
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X/S is between 0.95 and 0.99 |
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X/S is between 0.85 and 0.94 |
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X/S is equal to 1.00 |
Expert Solution
Step 1
A put gives right to sell the underlying, so a put option is said to be out of money, strike price is less than the current shares price.
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