A Call Option Has an Exercise Price of $35 and a Stock

question 69

Multiple Choice

A call option has an exercise price of $35 and a stock price of $36.50.If the call option is trading at $2.25,what is the time value embedded in the option?

• A) $0.00
• B) $0.75
• C) $1.50
• D) $2.25

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Definitions:

Troy Oz

A unit of measure for precious metals, where one troy ounce equals approximately 31.1035 grams.

Futures Contracts

Legal agreements to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.

Domestic Sugar

Sugar produced and consumed within a country's borders, not involving any international trade.

Option Contract

A contract which grants the holder the right to buy or sell an underlying asset at a predetermined price within a specified time frame.