Call Options
An investor buys an ABC 40 Call for $3 when ABC stock is trading at $43. What is the intrinsic value of this option?
Call intrinsic value = Stock Price - Strike Price. With the stock at $43 and a strike of $40, the intrinsic value is $43 - $40 = $3. The option is $3 in-the-money.
Complete Analysis & Legal Rationale
Call intrinsic value = Stock Price - Strike Price. With the stock at $43 and a strike of $40, the intrinsic value is $43 - $40 = $3. The option is $3 in-the-money.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.