You Own Two Call Option Contracts on ABC Stock with a Strike

question 31

Multiple Choice

You own two call option contracts on ABC stock with a strike price of $15. When you purchased the contracts the option price was $1.20 and the stock price was $15.90. What is the total intrinsic value of these options if ABC stock is currently selling for $14.50 a share?

• A) -$280
• B) -$180
• C) -$100
• D) $0
• E) $100

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Definitions:

Previous Valid Obligation

A duty or commitment that has been legally recognized and must be fulfilled as previously agreed or contracted.

Novation

The act of replacing an old obligation with a new one, thereby extinguishing the original obligation.

Consideration

In contract law, the benefit or value that each party agrees to give or receive as part of a legal agreement.

Satisfaction

The fulfillment of a need or desire; in a legal context, the discharge of an obligation or debt.