The fair market value of a near-month call option with a strike price of $45 is $5, when the stock is trading at $48.
Based on the preceding information, the call option:
A) has no intrinsic value currently.
B) is at the money.
C) is out of the money.
D) is in the money.

Question

Quizplus · Accepted Answer

The call option is in the money because the stock price ($48) is higher than the strike price ($45), giving it intrinsic value.

The Fair Market Value of a Near-Month Call Option with a Strike