A call option will have the highest value when the stock price is:
A) far above the exercise price.
B) closest to the exercise price.
C) approaching zero.
D) less than the exercise price.

Question

Quizplus · Accepted Answer

The value of a call option is higher when the stock price is far above the exercise price. This is because the owner of the call option has the right to buy the stock at a lower exercise price and sell it at the higher market price for a profit. As the stock price increases, the potential profit for the option owner also increases.

A Call Option Will Have the Highest Value When the Stock