A Call Option with Several Months Until Expiration Has a Strike

question 12

Multiple Choice

A call option with several months until expiration has a strike price of $55 when the stock price is $50. The option has ________ intrinsic value and ________ time value.

• A) negative; positive
• B) positive; negative
• C) zero; zero
• D) zero; positive

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Definitions:

General Plan

An overarching strategy or outline intended to achieve long-term goals.

Buffer

A temporary storage area, typically in memory, used to hold data while it is being transferred from one place to another.

Justification Material

Evidence or reasoning presented to support an argument or decision.

Strategic Buffer

A tactic or method used in communication to mitigate potential negativity or soften the delivery of a message.