Sppose an american call option is in the money so s gt x


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.

(Hint: consider what would happen if C S - X.)

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Sppose an american call option is in the money so s gt x
Reference No:- TGS01718347

Expected delivery within 24 Hours