Calculate the value of a short call if the strike price is $10.00,the premium is $1.50 and the spot price is $8.00,given V = P - max(S-X,0).

Name: Calculate the value of a short call if the strike price is $10.00,the premium is $1.50 and the spot price is $8.00,given V = P - max(S-X,0).
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Question

Quizplus · Accepted Answer

The value of a short call is calculated as the premium minus the intrinsic value. Here, the intrinsic value is max(S-X,0) = max(8-10,0) = 0. Therefore, V = 1.50 - 0 = $1.50.

Calculate the Value of a Short Call If the Strike