Final answer:
The intrinsic value of a call option with a stock price of $34 and an exercise price of $30 is $4. This is calculated as the difference between the stock price and the exercise price. The trading price of the call option, $5.25, includes more than just the intrinsic value.
Step-by-step explanation:
The intrinsic value of a call option is the difference between the current stock price and the exercise price, provided that this difference is positive. In this case, with a stock price of $34 and an exercise price of $30, the intrinsic value of the option is calculated by subtracting the exercise price from the stock price.
Therefore, the intrinsic value of the call option is:
$34 (Stock Price) - $30 (Exercise Price) =
$4
The call option is trading for $5.25, but this price includes time value and possibly volatility value, which are not part of the intrinsic value calculation.