You own four call option contracts on Webster South stock with a strike price of $17.50. When you purchased the shares the option price was $.85 and the stock price was $16.90. What is the
Intrinsic value of your investment if Webster is currently selling for $16.40 a share?
A) -$440
B) -$240
C) $0
D) $240
E) $440

Question

Quizplus · Accepted Answer

The intrinsic value of a call option is the difference between the current stock price and the strike price, if positive. Since the current stock price ($16.40) is less than the strike price ($17.50), the intrinsic value is $0.

You Own Four Call Option Contracts on Webster South Stock