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Assume you are the holder of a call option on €10,000. The option premium is $0.25...

Assume you are the holder of a call option on €10,000. The option premium is $0.25 per €. The exercise price is $1.125 per €. Should you exercise the call option if the current market price is $0.80 per €? Group of answer choices NO YES

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Answer #1

pay off upon exercise = spot price-current price-option premium = 0.8-1.125-0.25 = -0.575

it is better not to exercise. Loss will be premium = 0.25

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