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SIE: Equity Securities
SIE practice questionhardIn/Out/At the money

A call with a $25 strike and the underlying stock at $22 is:

  1. AOut of the money by $3✓ Correct answer
  2. BAt the money
  3. CIn the money by $3
  4. DIn the money by $22
Explanation

Why AOut of the money by $3

Calls are out-of-the-money if the strike exceeds market price, here by $3. In-the-money would require higher market price.

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