A certain stock is selling for $36.40. What is the minimum amount for which a call option on the stock with a strike price of $35 should sell?

Question

Quizplus · Accepted Answer

The minimum amount for which a call option on the stock with a strike price of $35 should sell is the difference between the stock price and the strike price, which is $1.40 ($36.40 - $35.00 = $1.40). Therefore, the minimum amount for which the call option should sell is $1.40. Option A is the correct choice as it is the only option that reflects this calculation. Option B is incorrect because the call option has some value, even if it is minimal. Option C is incorrect because the strike price is not the same as the current stock price. Option D is incorrect because option A is the best choice. The minimum amount for which a call option on the stock with a strike price of $35 should sell is the difference between the stock price and the strike price. In this case, the difference is $1.40 ($36.40 - $35). Therefore, choice A is the best choice. Option B cannot be correct since the call option has some value due to the possibility of the stock price increasing above $35. Option C isn't correct as well because the call option has some value beyond the strike price. Option D is also not correct as there is a minimum value that the call option would sell for.

A Certain Stock Is Selling for $36