Chapter 03 · Section 3.1

August call

This option is traded on a stock whose current market price is $ 153.00. The current month is May. The options expire in August. What is the intrinsic value of this option?

• a) $ -7
  No. You were right in subtracting the exercise price from the current price of the underlying asset. However, the intrinsic value of an option is never negative. At the worst, it is without value.
  b) $ 0
  c) $ 7
  d) $ 6.50

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