An investor takes a call option on euro futures contracts at strike price of $0.65.If the market price of euro futures reduces to $0.62,the call option will:

Question

Quizplus · Accepted Answer

A call option gives the holder the right, but not the obligation, to buy an asset at a specified strike price. If the market price is below the strike price, as in this case ($0.62 is less than $0.65), the option is "out of the money" and will likely go unexercised because it would be cheaper to buy the asset at the market price than to exercise the option.

An Investor Takes a Call Option on Euro Futures Contracts