OPTIONS CAN BE IN-THE-MONEY, OUT-OF-THE-MONEY, OR AT-THE-MONEY - SERIES 6 CANDIDATES MUST KNOW AND UNDERSTAND THE DIFFERENCE
The Series 6 Exam asks questions regarding Options and their Characteristics. FINRA's Content Outline for the SIE Exam includes Options in Section 3.2, and Option Characteristics, such as when options are "in-the-money," "out-of-the-money," or "at-the-money." Bob Eder discusses Options and their Characteristics in his Study for the Series 6 Exam . Here is a sample of Bob Eder's treatment: "When Options Are "In the Money" (3.2) A call option is in-the-money when the stock price is above the strike price of the call. A put option is in-the-money when the stock price is below the strike price of the put. "EXAMPLE #1 Johnny purchases three calls XYZ June 60 for three when XYZ stock is at 62. This call is in the money because the stock price (62) is higher than the strike price of XYZ call (60). "EXAMPLE #2 Joan purchases one put ABC Aug 50 for four when ABC stock is at 49. This put is in the money because ABC stock price (49...