Question
Yallow Company's stock is trading at $30 a share. Call options on the company's stock are also available, one with a strike price of $25
Yallow Company's stock is trading at $30 a share. Call options on the company's stock are also available, one with a strike price of $25 and one with a strike price of $35. Both options expire in three months. Which of the following best describes the value of these options?
If Yallow's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.
The options with the $25 strike price will sell for less than the options with the $35 strike price.
The options with the $25 strike price have an exercise value greater than $5.
The options with the $35 strike price have an exercise value greater than $0.
None of the above.
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