The intrinsic value of an option to buy stock rises as
A)the strike price increases and the price of the stock declines
B)the strike price increases and the price of the stock rises
C)the strike price decreases and the price of the stock declines
D)the strike price decreases and the price of the stock rises

Question

Quizplus · Accepted Answer

The intrinsic value of a call option (option to buy stock) increases as the difference between the stock price and the strike price increases. This happens when the strike price decreases and the stock price rises, making the option more valuable because it allows the holder to buy the stock at a lower price than the current market value.

The Intrinsic Value of an Option to Buy Stock Rises