If a Microsoft January 20 call option with a strike price of $20 was selling for $2.00 and the market price of the underlying Microsoft stock was $25.62, the call option would be _______________.
A) in-the-money
B) out-of-the-money
C) fairly priced
D) flat priced

Question

Quizplus · Accepted Answer

The strike price ($20) is lower than the market price of the underlying stock ($25.62), which means that the call option would allow the holder to buy the stock at a lower price. Therefore, the call option is in-the-money and would have intrinsic value.

If a Microsoft January 20 Call Option with a Strike