Chapter 03 · Section 3.1

Out-of-the-money call option

An out-of-the-money call option has:

• a) a premium higher than the price of the underlying asset.
  No. In order to determine if an option is in-, at- or out-of-the-money it is necessary to compare the exercise price of the option to the market price of the underlying asset. The premium of the option is not taken into consideration.
  b) a premium lower than the price of the underlying asset.
  c) an exercise price higher than the price of the underlying asset.
  d) an exercise price lower than the price of the underlying asset.
  e) a positive time value.

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