A call option is worthless if the underlying stock is worthless.

Name: A call option is worthless if the underlying stock is worthless.
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Question

Quizplus · Accepted Answer

A call option gives the holder the right to purchase the underlying stock at a certain price (strike price) before expiration. If the underlying stock is worthless, the call option holder has no reason to exercise the option because buying a worthless stock at the strike price would not make sense. Therefore, the call option would be worthless.

A Call Option Is Worthless If the Underlying Stock Is