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In an American-style call option scenario, where the strike price is $35, the underlying stock sells for $43, and the call premium is $12, what is the intrinsic value of the call?

User Daulat
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Final answer:

The intrinsic value of the American-style call option in the scenario provided is $8, computed by subtracting the strike price of $35 from the current stock price of $43.

Step-by-step explanation:

The intrinsic value of an American-style call option is the difference between the current stock price and the strike price, provided that this difference is positive. Since the stock is currently trading at $43 and the strike price is $35, the intrinsic value of the call is $8 ($43 - $35 = $8). The call premium given is $12, which is a separate cost for purchasing the option and does not affect the intrinsic value calculation.

User Seasoned
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