A $12.00 call that cost 65 cents will be allowed to lapse if the share price at expiry has reached only $12.25.

Question

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A $12.00 call option allows the holder to buy the stock at $12.00. If the share price is $12.25 at expiry, the option is in-the-money and can be exercised for a profit of $0.25 per share, minus the cost of the option ($0.65), resulting in a net loss of $0.40 per share. However, it would not be allowed to lapse as it still holds some intrinsic value.

A $1200 Call That Cost 65 Cents Will Be Allowed to to Lapse