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 the above.

Question

Quizplus · Accepted Answer

The intrinsic value of an out-of-the-money call option is zero because the stock price is below the exercise price, so there is no profit to be gained by exercising the option. The option holder would only exercise the option if the stock price rises above the exercise price, making it in-the-money.

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