Chapter 03 · Section 3.1

The time value of a put option 2

An 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 time value of this option?

• a) 3.50
  Yes. The time value of an option is simply the difference between the option premium and the intrinsic value. Time value will not reach zero until expiration of the option. Continue
  b) $ 0
  c) $ 146.00
  d) $ 10.50

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