You own two call option contracts on ABC with a strike price of €15.When you purchased the shares the option price was €1.20 and the share price was €15.90.What is the total intrinsic value of
These options if ABC is currently selling for €14.50 a share?

Question

Quizplus · Accepted Answer

The intrinsic value of an option is the difference between the underlying asset's price and the strike price, only when this difference is positive. Since the current share price (€14.50) is below the strike price (€15), the intrinsic value of the call options is €0. Call options give the right to buy at the strike price, but if the market price is lower, there's no benefit in exercising the option.

You Own Two Call Option Contracts on ABC with a Strike