Which of the following will produce the highest call price, all else constant? Assume that the options are all in-the-money.
A) $20 exercise price; 45 days to option expiration.
B) $25 exercise price; 45 days to option expiration.
C) $20 exercise price; 60 days to option expiration.
D) $25 exercise price; 60 days to option expiration.
E) Insufficient information to answer this question.

Question

Quizplus · Accepted Answer

Options with longer times until expiration (time value) and lower exercise prices (intrinsic value) are generally more valuable, making option C the most valuable given it has the longest time until expiration and the lower exercise price compared to option D.

Which of the Following Will Produce the Highest Call Price