CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Which of the following statements is not true?

A. After the expiration date the option becomes valuable.
B. An option is the right to buy or sell an underlying asset at the strike price.
C. Exercising an option involves buying or selling some asset.
D. The option price is the price paid to acquire the option.
Correct Answer: A

User Contributed Comments 3

User Comment
gweiden It's worthless at expiration.
johnowens not true, gweiden. it's worth at expiration is its excersise value. if you have a call option to buy a stock at $20, which is trading at $30, then on expiration date its worth $10 per share.

"After Expiration", it is no longer excersisable, so it is worthless.
johntan1979 johnowens is right. It is worthless AFTER expiration, not ON or BEFORE.
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