An 'at-the-money' call option:
A) Costs more than an 'in-the-money' call option
B) Costs less than an 'out-of-the-money' call option
C) Costs more than an 'out-of-the-money' call option
D) Costs the same as an 'in-the-money' put option

Question

Quizplus · Accepted Answer

An at-the-money call option has a strike price that is equal or very close to the current market price of the underlying asset. This means that the option has no intrinsic value and only consists of time value. As a result, it will cost more than an out-of-the-money option (which has no intrinsic value and less time value) but less than an in-the-money option (which has significant intrinsic value and more time value). An in-the-money put option is not directly comparable to an at-the-money call option, so option D is incorrect.

An 'At-The-Money' Call Option