Answer: out of the money.

## Explanation For a **put option**: - **In-the-money (ITM)**: When the underlying asset price is **less than** the exercise price (strike price). The put option has intrinsic value because you can sell the asset at a higher price than the market price. - **At-the-money (ATM)**: When the underlying asset price is **equal to** the exercise price. - **Out-of-the-money (OTM)**: When the underlying asset price is **greater than** the exercise price. The put option has no intrinsic value because you would not want to sell the asset at a lower price than the market price. **Given the scenario**: - Price of underlying > Exercise price - This means the put option is **out of the money**. **Why this is correct**: - If you hold a put option, you have the right to **sell** the underlying asset at the exercise price. - If the market price is higher than the exercise price, you would not exercise the option because you could sell the asset at a higher price in the market. - Therefore, the option has no intrinsic value and is out of the money. **Example**: - Put option with exercise price = $50 - Current underlying price = $60 - The put option is OTM because $60 > $50. You wouldn't exercise the right to sell at $50 when you could sell at $60 in the market.

Author: LeetQuiz .