Chapter 02 · Section 2.1

Exercising Options-1

Now let us consider when it is profitable to exercise an option: Suppose you are the holder of a PHLX DM call option.

You will most likely decide to exercise when the option is:

a) out-of-the-money.
• b) at-the-money.
  No. When a call option is at-the-money, the price of the underlying asset is equal to the exercise price. You probably would not exercise the option.
  c) in-the-money.
  d) None of the above affect the decision to exercise.

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