You are currently holding a call option on a stock with an exercise price of $80.If the current stock price is $60,your net proceeds by exercising this option will be:
A) -$20.
B) $0.
C) $20.
D) $60.

Question

Quizplus · Accepted Answer

If the current stock price is $60 and the exercise price is $80, it means that exercising the option will result in a loss because you would have to pay $80 for a stock that is only worth $60. Therefore, the net proceeds would be negative $20. It would be more beneficial to either hold onto the option and hope the stock price increases, or sell the option to someone else for a profit.

You Are Currently Holding a Call Option on a Stock