Question

THIS IS A TWO PART QUESTION. YOU MUST GET BOTH PARTS CORRECT TO EARN CREDIT. Option Quotations for China Doll (CD) Corporation are listed as follows: ............................................CALL.........PUT Closing.....Strike....EXP...Premium....Premium 10.44............10.30......Jul........0.6400.........0.1000 10.44............10.30......Sep......0.8900.........0.2500 10.44............10.80......Aug......0.5000.........1.060 10.44............11.05......Oct.......0.7000........1.510 10.44............11.30......Jun.......1.000.........1.960 "Closing" represents the closing price per share of CD on a particular trading day. PART 1: Is the Sep Call in-the-money or out-of-the-money? (answer with the word IN or the word OUT) PART 2: Is the Jun Put in-the-money or out-of-the-money? (answer with the word IN or the word OUT)

Answer 1

Part 1:

As the strike price < closing price, the Sep Call option is IN-the-money

Part 2:

As the strike price > closing price, the Jun Put option is IN-the-money