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
b) $ 0
c) $ 7
• d) $ 6.50
  No. The intrinsic value of an option is the profit which the option holder can realize by exercising the option. Take a look at the difference between the market price of the underlying asset and the option's exercise price.

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