The intrinsic value of a call is the difference between the value of the underlying asset and the exercise price. When the value of the underlying asset is above the exercise price, the intrinsic value is positive. When the value of the underlying asset is below the exercise price, the intrinsic value is negative.

Question

Quizplus · Accepted Answer

The intrinsic value of a call option cannot be negative; it is zero when the underlying asset's value is below the exercise price.

The Intrinsic Value of a Call Is the Difference Between