What is the exercise value of the call option

Reference no: EM132208179

Question - Almost Bankrupt Technology stock (ABT) is currently trading at $30/share (spot price.) A call option on the stock with a $25 strike price currently sells for $7 (that's the premium.)

a) What is the exercise value of the call option?

b) Is the option currently in the money? Look up this term.

c) There are 30 days left to expiration, is it worth buying the call? Why? This one requires thinking.

d) Stock option contracts come in denominations of 100 shares per contract. What is the maximum amount of money you can lose by buying this particular call option contract?

Reference no: EM132208179

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