The upper bound on the market value of a call option is the __________ and the lower bound is the ___________________.

Question

Quizplus · Accepted Answer

The upper bound on the market value of a call option is the value of the underlying asset, because an option cannot be worth more than the asset itself. The lower bound is the intrinsic value, which is the actual gain if the option were exercised at that moment (or zero if exercising the option would not be profitable).

The Upper Bound on the Market Value of a Call