Final answer:
The value (payoff) of a call option with a strike price of $22.5 to the writer of the option, when the stock is priced at $30.25, is -$7.75 per share, as the writer incurs a loss due to the stock's current price being higher than the strike price.
Step-by-step explanation:
The student is asking about the value (payoff) of a call option to the writer of the option when a stock is currently priced at $30.25, and the call option has a strike price of $22.5. To determine this, we need to consider that the value (payoff) of a call option to the writer is the amount they would have to pay if the option is exercised. Since the stock price ($30.25) is above the strike price ($22.5), the call option will be exercised.
The writer of the option must sell the stock at the strike price, losing out on the difference with the current price. The value (payoff) per share to the writer would be the strike price minus the stock's current price: $30.25 (current price) - $22.5 (strike price) = $7.75. However, since the writer is losing this amount, the value (payoff) is negative from their perspective, so it is -$7.75 per share.