Put Options
A put option with a strike price of $45 when the stock trades at $50 is:
Put ITM: strike > market. Put OTM: strike < market. Opposite of calls.
Complete Analysis & Legal Rationale
A put is out of the money when the strike price is below the market price. With a $45 strike and $50 market price, the put holder would not exercise because they could sell the stock for more in the market ($50 > $45).
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
The put would be in the money if the strike ($45) exceeded the market price ($50).
Matches the verified teaching point in the explanation.
At the money requires strike to equal market price.
$45 is the strike price, not the intrinsic value.
Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.