### Calculate the option exercise value

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##### Reference no: EM13743528

The exercise price on one of ORNE Corporation's call options is \$35 and the price of the underlying stock is \$34. The option will expire in 55 days. The option is currently selling for \$0.25.

a. Calculate the option's exercise value?

b. Calculate the value of the premium over and above the exercise value? What does this value represent?

c. Is this an out-of-the money option, at-the-money, or in-the-money? Why?

d. What will happen to the value of the option if the underlying stock price changes to \$34.50? Why?

e. If this were a put option, would it have a greater or lesser value than the call option? Why?

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