If the share price at the expiry of a call option is less than the exercise price,the call is worth:

Question

Quizplus · Accepted Answer

A call option gives the holder the right, but not the obligation, to buy a certain quantity of the underlying asset (in this case, shares) at the exercise price, on or before the expiry date. If the share price at expiry is less than the exercise price, it does not make sense for the holder of the call option to exercise their right to buy the shares at a higher price. Therefore, the call option will expire worthless, and the holder will not receive any payout. Hence, the answer is A) zero.

If the Share Price at the Expiry of a Call