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Maria purchased one xyz december 50 put for $2 when the market price of the stock was $55. subsequently, the market price of the stock rose to $60. What is the intrinsic value of the call option after the stock price appreciation?

1 Answer

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Final answer:

Maria's XYZ December 50 put option has an intrinsic value of $0 after the stock price rose to $60, since the market price is above the strike price.

Step-by-step explanation:

The question involves a financial concept related to the options market, more specifically the value of a put option after a change in the underlying stock price. Maria purchased a XYZ December 50 put for $2 when the stock was trading at $55. After the stock price increased to $60, the intrinsic value of the put option would be $0 because the market price of the stock is above the strike price of the put option. Intrinsic value of a put option is calculated as the strike price minus the stock price, but it cannot be negative; therefore, if the stock price is above the strike price, as in this scenario, the intrinsic value is zero.

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