Question

It is never optimal to exercise an American call option on a non-dividend paying stock early. True or false?

Answer 1

Answer:

False

Explanation:

Exercising an American call option on a stock with non –dividend  provides greater interest or saving on interest as compared to holding those call option.

In general, An American call can be exercised any time prior to its expiry time limit. In case of an American call on a stock with dividend, early exercise before the expiry is optimal. Early exercise also provides for in depth money options.