Suppose the current spot rate for the DM is $0.5925. The call premium on a call option with an exercise price of $0.5675 is $0.0373. What is the intrinsic value of one DM 62,500 call option?

Question

Quizplus · Accepted Answer

The intrinsic value of a call option is the difference between the spot rate and the exercise price, multiplied by the contract size. Here, it is ($0.5925 - $0.5675) * 62,500 = $1,562.50.

Suppose the Current Spot Rate for the DM Is $0