Options Trading Tutorial

How can the strike price of a call option begin lower than the current market price?

Regarding a call option how can the contract begin 'In The Money"? The price of a stock is $5 and the strike price is $3 at the beginning of the contract.

Public Comments

1. This is possible if the premium you are paying for the option, covers more than the discount. In your example, you would have to pay at least $2, plus some additional amount for the time value of the option.