Consider a stock that is currently trading at $10. Calculate the intrinsic value for a call option that has an exercise price of $15.
A) $25
B) -$5
C) $0
D) $20
E) $5

Question

Quizplus · Accepted Answer

The intrinsic value for a call option is calculated by taking the current stock price and subtracting the exercise price. In this case, current stock price is $10 and exercise price is $15, so the intrinsic value is $0. Since the stock price is below the exercise price, the call option is considered "out of the money" and has no intrinsic value.

Consider a Stock That Is Currently Trading at $10