Question

last week, you purchased a call option on category, inc. stock at an option price of $1.05. the stock price last week was $28.10. the strike price is $27.50. what is the intrinsic value per share if category, inc. stock is currently priced at $29.03?

Answer 1

The intrinsic value per share of the call option on Category, Inc. stock is $1.53, calculated by subtracting the strike price of $27.50 from the current stock price of $29.03.

Step-by-step explanation:

The intrinsic value of a call option is the difference between the current stock price and the strike price, if this difference is positive. For Category, Inc. stock, the intrinsic value per share can be calculated as follows:

Current stock price = $29.03

Strike price = $27.50

Intrinsic value per share = Current stock price - Strike price

Intrinsic value per share = $29.03 - $27.50

Intrinsic value per share = $1.53

Since the intrinsic value per share is greater than zero, the call option has value. If it were less than zero, the call option would be considered 'out of the money' and the intrinsic value would be $0.