Question

Q)a call option is at the money if the market price and exercise price are the same in this case

1)the option may be exercised

2)option may not be exercised

Answer 1

Solution:-

A call option gives a right but not an obligation to the option buyer to buy the underlying security at the strike price. Whether the option price is in the money or not, it is still the right of the optionholder to exercise his option if he wants.

Offcourse, it is theoretical as an optionholder would want to exercise only if the option is in the money, however, it is still the right of an option holder to call his broker and exercise his option even if it at the money or out of money.

Therefore, the correct option is option 1- The option may be exercised