Question
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The price of a non-dividend-paying stock is $74. A three-month American call option on the stock...
The price of a non-dividend-paying stock is $74. A three-month American call option on the stock with a strike price of $70 is selling for $9. What is the intrinsic value (IV) of this call option?
Solutions
Expert Solution
The call option is in-the-money because the stock price is higher than the strike price.
Intrinsic value of in-the-money call option = (stock price - strike price)
Intrinsic value = $74 - $70
Intrinsic value = $4
jeff jeffy answered 2 years agoRelated Solutions
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