Question

An investor purchases a put option with a strike price of $100 for $3. This option is considered "in the money" if the underlying is trading:

Answer 1

Answer: a.below $100

Explanation:

When a Put option is considered "in the money", it means that the underlying stock is trading at a value less than the strike price.

This is because with Put options, a person makes a profit if the underlying stock decreases to a value lower than the Strike Price because the Put option gives them to right to sell at the Strike price which means they would be selling at a value higher than the Market.

The above Put is therefore "in the money" if the underlying is selling less than the Strike price of $100.