An American call option buyer on a nondividend paying stock will
A)always exercise the call as soon as it is in the money.
B)only exercise the call when the stock price exceeds the previous high.
C)never exercise the call early.
D)buy an offsetting put whenever the stock price drops below the strike price.
E)None of the options

Question

Quizplus · Accepted Answer

An American call option buyer will not exercise early if the stock does not pay dividends; exercising forfeits the time value.Rather, the option buyer will sell the option to collect both the intrinsic value and the time value.

An American Call Option Buyer on a Nondividend Paying Stock