The intrinsic value of an out-of-the-money call option is equal to
A) the call premium.
B) zero.
C) the stock price minus the exercise price.
D) the striking price.
E) none of these.

Question

Quizplus · Accepted Answer

The intrinsic value of an option is the difference between the current stock price and the exercise price (if it is positive), but for an out-of-the-money call option, the stock price is below the exercise price, so the intrinsic value is zero. Therefore, the correct answer is B) zero.

The Intrinsic Value of an Out-Of-The-Money Call Option Is Equal