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
The intrinsic value of a call option is equal to the current market price of the underlying asset minus the exercise price.
However, the intrinsic value can never be negative.