All of the following statements about the value of a call op

All of the following statements about the value of a call option at expiration are true, except that the:

a. Value of the long position equals zero or the stock price minus the exercise price, whichever is higher.

b. Value of the long position equals zero or the exercise price minus the stock price, whichever is higher.

c. Short position in the same call option has a zero value for all stock prices equal to or less than the exercise price.

d. Short position in the same call option can result in a loss if the stock price exceeds the exercise price.

Solution

Correct option is option B.

Value of the long position equals zero or the exercise price minus the stock price, whichever is higher.

value of call = max(0, S - X)

where S is stock price and X is strike price