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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Options

Nifty spot is 22,500. Which of the following options is in-the-money?

The put with strike 22,700 is in-the-money, because a put has intrinsic value when the strike is above the spot price. Here spot is 22,500, giving the put 200 points of intrinsic value, while the other options are out-of-the-money.

  1. ACall with strike 22,700
  2. BPut with strike 22,300
  3. CPut with strike 22,700Correct
  4. DCall with strike 22,900

Explanation

A put is in-the-money when strike is above spot. The 22,700 put has intrinsic value of 200. Calls with strikes above spot are out-of-the-money, and the 22,300 put is also out-of-the-money.

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