SIE practice questioneasyOptions - Intrinsic Value
If a call option has a strike price of $50 and the stock is trading at $55, what is the option’s intrinsic value?
- A$5✓ Correct answer
- B$0
- C$50
- D$55
Explanation
Why A — $5
The intrinsic value of a call option is the difference between the stock price and the strike price: $55 - $50 = $5. Other values are either the strike or market price, or zero if out of the money.
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