Suppose that a share of Callidus Corp sells at a price of $30 on the expiration date. Compute the price of a call option if the exercise price is $40.
A)$10
B)-$10
C)$0
D)$20

Question

Quizplus · Accepted Answer

Since the share price ($30) is less than the exercise price ($40) of the call option, the holder of the call option would not want to exercise it. Therefore, the option would be worthless and the price of the call option would be $0.

Suppose That a Share of Callidus Corp Sells at a Price