SIE practice questionmediumOptions - Intrinsic Value
A stock is trading at $55. Which of the following has the greatest intrinsic value?
- AA call with a $50 strike price✓ Correct answer
- BA call with a $60 strike price
- CA put with a $50 strike price
- DA put with a $55 strike price
Explanation
Why A — A call with a $50 strike price
A $50 call has $5 of intrinsic value ($55-$50). Calls with higher strikes and puts are either out-of-the-money or at the money in this scenario, so A is correct.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Options questions
- A fiduciary investing for a trust must avoid which options strategy?
- A customer believes a stock will rise and wants the right to buy it at a set price. Which option should they purchase?
- If a stock is trading at $42 and an investor holds a call option with a $40 strike price, what is the intrinsic value…
- The underwriting spread (or gross spread) in a firm commitment offering represents:
- Before a customer may trade options, the broker-dealer must:
- In a firm commitment underwriting, the underwriter:
- An investor expects moderate appreciation in a stock and wishes to generate extra income. Which option strategy is most…
- A market maker quotes a stock at $25.00 bid / $25.15 ask. If a customer sells 100 shares at the market, the customer…