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Call Option-Out of the money

Explain the terminology that an option is in-, at-, or out-of-the-money?

E

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A call (put) option with St > E (E > St) is referred to as the trading in-the-money.  If St ≡ E the option is trading at-the-money.  If St < E (E < St) the call (put) option is trading out-of-the-money.

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