No one would purchase and exercise an option to buy stock

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Assume that a stock is selling for a price greater than the per-share exercise price, the call has positive intrinsic value. This may be referred to as the option’s being in the money. If the common stock is selling for a price that equals the strike price, the option is at the money. And if the price of the stock is less than the strike price, the call option has no intrinsic value. The option is out of the money. No one would purchase and exercise an option to buy stock when the stock could be purchased for a price that is less than the strike price.

Comment on the above and state your agreement or disagreement with the last statement. [Ref. Chapter 17]

Reference no: EM131513495

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