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What is the intrinsic value of the call option

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Reference no: EM132684618

Six months ago, you sold an American call option for $3. The option is about to expire. It has an exercise price of $25 and a premium of $5. The underlying asset is selling for $27.

Problem a) How would you describe this option: in-the-money, at-the-money or out-of-the-money?

Problem b) What is the intrinsic value of this call option?

Problem c) What is the time value of this call option?

Problem d) What would your overall profit or loss be if the option is expired immediately?

Reference no: EM132684618

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