The lower price for a call option on a stock is the _________ and the lower price limit for a put option on the same stock is the _________
A) Stock price; stock price.
B) Stock price; put intrinsic value.
C) Call intrinsic value; stock price.
D) Call intrinsic value; put exercise price.
E) Call intrinsic value; put intrinsic value.

Question

Quizplus · Accepted Answer

The lower price for a call option on a stock is the call intrinsic value, which represents the amount by which the stock price exceeds the exercise price (strike price) of the call option. On the other hand, the lower price limit for a put option on the same stock is the put intrinsic value, which represents the amount by which the exercise price of the put option exceeds the stock price. Therefore, the correct answer is E - call intrinsic value for the lower price of a call option and put intrinsic value for the lower price limit of a put option.

The Lower Price for a Call Option on a Stock