Suppose an American call option is in the money, so S > X. Demonstrate that the market

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Suppose an American call option is in the money, so S > X. Demonstrate that the market price of this call (C) cannot be less than the difference between the stock price and the exercise price. That is, explain why this must be true: C ≥ S – X.

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Introduction to Corporate Finance What Companies Do

ISBN: 978-1111222284

3rd edition

Authors: John Graham, Scott Smart

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Question Posted: Mar 26, 2015 07:02 AM

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Suppose an American call option is in the money, so S > X. Demonstrate that the market

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If the call sold for less than its intrinsic value S X then arb...View the full answer

Introduction to Corporate Finance What Companies Do

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