MM Mock 2 Q48

CFA Level III
#1

I understand that gamma is highest when the option is near expiration and at the money but… shouldn’t you also have to factor in the option premium to determine if it’s at the money?

If you sold calls at a $200 strike price but the party who bought them from you paid a $37 premium - wouldn’t the underlying have to reach $237 to truly be at the money?

#2

At the money is at the money: strike price equals spot price.

Options are stupid: they don’t know who bought them, when they bought them, nor how much they paid for them.

#3

Thank you for the explanation. Now I’ll always remember this by “Options are stupid” haha.