Suppose that a share of Callidus Corp sells at a price of $50 on the expiration date. Compute the price of a put option if the exercise price is $50.
A)$0
B)$50
C)$10
D)$20

Question

Quizplus · Accepted Answer

At the expiration date, if the share price equals the exercise price ($50 in this case), the put option will expire worthless because the holder would not exercise the option to sell shares at the market price when they could simply sell them in the market for the same price. Therefore, the price of the put option would be $0.

Suppose That a Share of Callidus Corp Sells at a Price