The value of a listed call option on a share is lower when ________.
I. the exercise price is higher
II. the contract approaches maturity
III. the share decreases in value
IV. a share split occurs
A)II, III and IV only
B)I, III and IV only
C)I, II and III only
D)I, II, III and IV

Question

Quizplus · Accepted Answer

The value of a call option decreases when the exercise price is higher (I), when the share decreases in value (III), and as the contract approaches maturity (II) due to time decay. A share split (IV) does not inherently decrease the value of a call option.

The Value of a Listed Call Option on a Share