Chapter 03 · Section 3.1

In-the-money put option

An in-the-money put option has:

a) a negative time value.
• b) an exercise price lower than the premium.
  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.
  c) an exercise price higher than the price of the underlying asset.
  d) a negative intrinsic value.

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