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
b) $ 0
c) $ 146.00
• d) $ 10.50
  No. $ 10.50 is the option premium. Time value is only one component of this premium. You must also look at intrinsic value.

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