What is the intrinsic value of a call with a strike price of $40 if the market price of the underlying stock is $44? The call's ask price $540.
A) -$400
B) -$140
C) $940
D) $400

Question

Quizplus · Accepted Answer

The intrinsic value of a call option is calculated as the current market price of the stock minus the strike price of the option, provided this difference is positive; otherwise, it's zero. Here, it's $44 - $40 = $4. Since options typically represent 100 shares, the intrinsic value is $4 * 100 = $400.

What Is the Intrinsic Value of a Call with a Strike