Define that an option is in-, at-, or out-of-the-money, Financial Management

What is meant by the terms that an option is in-, at-, or out-of-the-money?

Answer:  A call or put option with St > E (E > St) is considered to as trading in-the-money.  If St ≅  E the option is trading at-the-money.  Determine if St < E (E < St) the call (put) option is trading out-of-the-money.

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