Please explain how you find whether they are in, out, or at the money.

You currently have a position on a straddle. A straddle is a combination of a long call and a 108 long put on the same stock. You bought the call and the put at the same premium of $2. The two options have the same expiration date and the same exercise price of $40. 1) If the stock price is $42, what is your net income? NI for the put position: -2 (out-of-the-money) NI for the call position: 42402=0 (in-the-money) Total: -2 2) If the stock price is $35, what is your net income? NI for the put position: 40352=3 (in-the-money) NI for the call position: -2 (out-of-the-money) Total: 1