CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

An options investor longs one index put option on the Standard & Poor's 100 Index (S&P100). The put has the following characteristics:

Type of option: put option
Underlying asset: S&P100
Exercise price: 640
Premium: 0.31
Expiration date: October

The current price of the S&P100 is 787.77. This long put option is ______.
A. in the money in the amount of 147.77
B. out of the money in the amount of 639.69
C. out of the money in the amount of 147.77
Explanation: Since the current price is greater than the exercise price, the put option is out of the money. The difference between the current price and the exercise price is 147.77.

User Contributed Comments 3

User Comment
Yuyan This has nothing to do with the short or long position you take.
Criticull Yes it does. You're long a put. You are in the money if the price of the underlying falls below the exercise. You are out of the money if it stays above it. It only has to do with the position that you took. It's a question about the result of a position.
birdperson Criticull - it doesn't matter. the put is 147.77 out of the money. period.
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