Question

A call option on Barry Enterprises stock has a market price of $12. The stock sells for $23 a share, and the option has an exercise price of $17.50. What is the exercise value of the option

Answer 1

Answer:

the exercise value of the option is $5.50

Explanation:

The computation of the exercise value of the option is given below:

= Sale value of the stock - exercise price of the option

= $23 - $17.50

= $5.50

Hence, the exercise value of the option is $5.50

Simply we deduct the exercise price of the option from the sale value of the option

And, the same should be considered