A stock has both a call and a put option outstanding. The exercise price was set equal to the stock price. If the option were to expire now what would be the minimum value of the call and the put respectively? A) (ST- E); ≥ 0. B) 0; (ST- E). C) 0. D) 0; 0. E) (E - ST); (ST- E).

Question

A stock has both a call and a put option outstanding. The exercise price was set equal to the stock price. If the option were to expire now what would be the minimum value of the call and the put respectively?
A) (ST- E); ≥ 0.
B) 0; (ST- E).
C) <0; >0.
D) 0; 0.
E) (E - ST); (ST- E).

Quizplus · Accepted Answer

At expiration, the minimum value of both a call and a put option is 0, as options cannot have negative value.

A Stock Has Both a Call and a Put Option