Consider the $13.50 and $13.00 May Swans Inc.calls that are trading at 7 and 13 cents, when the share price is $12.34.The $13.00 call is a better buy, as it is only 6 cents more expensive whereas its exercise price is 50 cents lower.

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Quizplus · Accepted Answer

The $13.00 call is not necessarily a better buy just because it is cheaper and has a lower exercise price. The value of an option also depends on other factors such as time to expiration, implied volatility, and the likelihood of the stock price exceeding the strike price.