Underlying stock price: 45.80 What is the market value per share of the November 47.50 call?

Question

Underlying stock price: 45.80  What is the market value per share of the November 47.50 call?

Quizplus · Accepted Answer

To calculate the market value per share of the November 47.50 call, we need to first calculate the intrinsic value and the time value.

Intrinsic value = underlying stock price - strike price 
Intrinsic value = 45.80 - 47.50 = -1.70

As the intrinsic value is negative, it means that the option is out of the money. Therefore, the market value per share of the November 47.50 call will be equal to the time value, which is the premium paid for the option.

According to the answer choices, the only option with a time value or premium of more than $1.70 is choice B, which is $2.30. Hence, the correct answer is B.

Underlying Stock Price: 45