You have shorted a call option on WSJ stock with a strike price of $50.The option will expire in exactly six months.If the stock is trading at $45 in three months,what will you owe for each share in the contract?
A)$0
B)$50
C)$60
D)$10
E)$40

Question

Quizplus · Accepted Answer

When you short a call option and the stock price is below the strike price (in this case, $45 is below the $50 strike price), the option is out-of-the-money and you owe nothing at expiration. However, since the option has not yet expired in this scenario, the current obligation is still $0, as the option has no intrinsic value at this moment.

You Have Shorted a Call Option on WSJ Stock with a Strike