Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

When the market price exceeds the strike price of a put option, the appropriate classification is that the put option is "out of the money." This means that exercising the option would not be beneficial, as the holder would not be able to sell the underlying asset at a price higher than the current market price. In such a scenario, the put option has no intrinsic value because the holder does not gain any advantage from selling the asset at the higher strike price compared to the market price.

In contrast, if the market price were equal to the strike price, the option would be considered "at the money," and if the market price was below the strike price, then the option would be classified as "in the money." The term "at parity," which refers to a situation where the market price of the underlying asset and the strike price yield an equal value for the option, typically applies in contexts involving call options or other financial assets, but it does not appropriately describe the relationship of a put option under these circumstances.