The value of a call option just prior to expiration is (where V is the underlying asset's market price and X is the option's exercise price)
A)Max [0, V - X]
B)Max [0, X F- V]
C)Min [0, V - X]
D)Min [0, X - V]
E)Max [0, V X]

Question

The value of a call option just prior to expiration is (where V is the underlying asset's market price and X is the option's exercise price)
A)Max [0, V - X]
B)Max [0, X F- V]
C)Min [0, V - X]
D)Min [0, X - V]
E)Max [0, V > X]

Quizplus · Accepted Answer

The value of a call option at expiration is the maximum of either zero or the difference between the underlying asset's market price (V) and the exercise price (X). If V > X, the option is in-the-money and its value is V - X; otherwise, it is worthless.

The Value of a Call Option Just Prior to Expiration