C₁ = 0 if (S₁- E)

Name: C 1 = 0 if (S 1 - E) < 0 identifies the value of a call option at expiration.
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Question

C₁ = 0 if (S₁- E) < 0 identifies the value of a call option at expiration.

Quizplus · Accepted Answer

The expression given is a simplified representation of the intrinsic value calculation for a call option at expiration, which states that if the stock price (S) minus the strike price (E) is less than 0, the value of the call option is 0, because call options are not exercised if the stock price is below the strike price at expiration.

C1 = 0 If (S1- E) < 0 Identifies the Value

C₁ = 0 If (S₁- E) < 0 Identifies the Value