A stock is currently selling for $70 per share and its call option has a $90 exercise price.What is the lower limit on the value of the call option?
A) - $20
B) 0
C) $10
D) $20

Question

Quizplus · Accepted Answer

The lower limit on the value of a call option is always zero. If the stock price stays below the exercise price, the option will expire worthless and the buyer will simply not exercise it. Therefore, the minimum the option can be worth is zero.

A Stock Is Currently Selling for $70 Per Share and Its