Q591
Intrinsic value of call option is considered as out of money if
A.
bond price > treasury price
B.
treasury price < bond price
C.
stock price > exercise price
D.
stock price < exercise price
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Intrinsic value of call option is considered as out of money if stock price < exercise price. The intrinsic value of both call and put options is the difference between the underlying stock's price and the strike price. In the case of both call and put options, if the calculated value is negative, the intrinsic value is zero.