SIE practice questioneasyOptions - Intrinsic Value
If a stock is trading at $55 and a call option has a $50 strike price, what is the call’s intrinsic value?
- A$0
- B$50
- C$5✓ Correct answer
- D$55
Explanation
Why C — $5
Intrinsic value for a call is stock price minus strike price ($55-$50=$5). $50 and $55 are incorrect; $0 is only if the option is at or out of the money.
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