Asked by Woedem Malorku on Apr 29, 2024

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Verified

The intrinsic value of an in-of-the-money call option is equal to

A) the call premium.
B) zero.
C) the stock price minus the exercise price.
D) the striking price.
E) None of the options are correct.

In-the-money

A term used in options trading to indicate that an option has intrinsic value, meaning it is profitable to exercise.

Intrinsic Value

The actual, fundamental value of an asset, based on underlying perceptions of its true value including all aspects of the business, in terms of both tangible and intangible factors.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock or other asset at a set price within a specific time period.

  • Spot and measure the intrinsic and time-associated values of options.
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Verified Answer

CG
Caroline GrundyMay 01, 2024
Final Answer :
C
Explanation :
The intrinsic value of an in-the-money call option is calculated as the current stock price minus the exercise price of the option. This represents the immediate exercise value of the option.