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An investor owns a call option on XYZ that expires in three months and has a strike price of $ 1 3 0 per share.

An investor owns a call option on XYZ that expires in three months and has a strike price of $130 per share. The current price of XYZ stock is $125 per share, and the current market price of the option is 31/8. Which of the following actions should the investor take, and why?
A)
Do not exercise the option, because the intrinsic value of the option ($128) is less than the strike price of the option ($130).
B)
Exercise the option, because the market value of the option ($3) is above zero.
C)
Exercise the option, because the excess of the strike price over the market price would result in an immediate gain of $5 per share.
D)
Do not exercise the option, because the strike price exceeds the market price and the transaction would result in an immediate loss.

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