Consider this graph of a call option.The option is a three-month American call option on €62,500 with a strike price of $1.50 = €1.00 and an option premium of $3,125.What are the values of A,B,and C,respectively?
A)A = $3,125 (or $.05 depending on your scale); B = $1.50; C = $1.55
B)A = €3,750 (or €.06 depending on your scale); B = $1.50; C = $1.55
C)A = $.05; B = $1.55; C = $1.60
D)none of the options

Question

Consider this graph of a call option.The option is a three-month American call option on €62,500 with a strike price of $1.50 = €1.00 and an option premium of $3,125.What are the values of A,B,and C,respectively? 
A)A = $3,125 (or $.05 depending on your scale); B = $1.50; C = $1.55 
B)A = €3,750 (or €.06 depending on your scale); B = $1.50; C = $1.55 
C)A = $.05; B = $1.55; C = $1.60 
D)none of the options

Quizplus · Accepted Answer

A: The value of A is the option premium, which is given as $3,125.
B: The strike price is given as $1.50 = €1.00.
C: The point where the graph intersects with the x-axis (i.e., the break-even point) is $1.55. Therefore, C = $1.55.

Consider This Graph of a Call Option