Asked by Rheagan Fischette on Jun 15, 2024
Verified
If the current price of a stock is below the strike price,then an option to buy the stock is worthless and will have a zero value.
Strike Price
The strike price is a predetermined price at which the holder of an option can buy (call option) or sell (put option) the underlying asset until the expiration date.
Current Price
The present value or selling price of an asset, security, or commodity available in the marketplace.
- Investigate the consequences of stock price modifications on the worth of call and put options.
Verified Answer
CC
Carlos CasteloJun 22, 2024
Final Answer :
False
Explanation :
An option to buy a stock (a call option) may still have time value even if the current price of the stock is below the strike price, as there is potential for the stock price to rise above the strike price before the option expires.
Learning Objectives
- Investigate the consequences of stock price modifications on the worth of call and put options.
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