A call option has an exercise price of $30 and a stock price of $34.If the call option is trading for $5.25,what is the intrinsic value of the option?
A) $0.00
B) $1.25
C) $4.00
D) $5.25

Question

Quizplus · Accepted Answer

The intrinsic value of a call option is the difference between the stock price and the exercise price. In this case, it is $34 - $30 = $4. The option is trading for $5.25, which includes both the intrinsic value and the time value. Therefore, the intrinsic value of the option is $4, which is given by choice C.

A Call Option Has an Exercise Price of $30 and a Stock