Chapter 03 · Section 3.1

August put

This option is traded on a stock whose current market price is $ 153.00. The current month is May. The options expire in August.

What is the intrinsic value of this option?

a) $ -7
b) $ 0
• c) $ 7
  Yes. The put holder only profits when the price decreases. Since the intrinsic value is the profit the put holder would realize if he exercised the option, the intrinsic value is equal to the exercise price minus the market price. Continue
  d) $ 10.50

(Click here for help)