Suppose that a share of Callidus Corp sells at a price of $45 on the expiration date. Compute the price of a call option if the exercise price is $40.
A)$40
B)$10
C)$5
D)$45

Question

Quizplus · Accepted Answer

The price of a call option at expiration is the difference between the stock price and the exercise price, if the stock price is above the exercise price. Here, it's $45 - $40 = $5. If the stock price were below the exercise price, the call option would be worthless, as it wouldn't be exercised.

Suppose That a Share of Callidus Corp Sells at a Price