Given strictly positive interest rates and an underlying stock that pays no dividends,the best way to close out a long American call option position early is to:

Question

Quizplus · Accepted Answer

When the interest rates are positive, it is more beneficial to hold the option position instead of exercising it early since exercising would mean giving up the time value of money. Therefore, the best option is to sell the call and take the profit from the increase in the option's value.

Given Strictly Positive Interest Rates and an Underlying Stock That