Suppose the current spot exchange rate between the U.S. dollar and British pound is $1.6/. A European call option on pounds is expiring today. The call option has an exercise price of $1.56/. At the same time, a European put option on pounds is expiring today. The put option has an exercise price of $1.65/. 2 points

Given the information above, which of the following is correct?

1. both the call option and the put option are out-of-the-money.
2. both the call option and the put option are in-the-money.
3. the call option is in-the-money while the put option is out-of-the-money.
4. the call option is out-of-the-money while the put option is in-the-money.