Which of the following will produce the highest call price, all else constant?
A) $24 stock price; $25 exercise price.
B) $36 stock price; $35 exercise price.
C) $15 stock price; $15 exercise price.
D) $29 stock price; $30 exercise price.
E) $19 stock price; $20 exercise price.

Question

Quizplus · Accepted Answer

The call price increases as the difference between the stock price and the exercise price increases, assuming all else is constant. Option B has the highest stock price relative to the exercise price, indicating the call option is in the money by the greatest amount, which typically results in a higher call price.

Which of the Following Will Produce the Highest Call Price