Why can option price never exceed stock price? You mean a call option,
QUESTION
Why can option price never exceed stock price?
You mean a call option, right? Because a put option price could exceed the stock price. A call option wont because it just gives you the right to buy the stock at some other price. If the stock is selling at 50, even if the call option gives you the right to buy it at 5, you wouldnt pay much more than 45
or it. If the call option gave you the right to buy it at 1, you would pay 49 but not much more. If you can own the shares themselves at 50, why would anyone pay more than 50 just for the right to buy them?
ANSWER:
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.