Chapter 03 · Section 3.1
Out-of-the-money call option
An out-of-the-money call option has:
e) a positive time value.
No. In order to determine if an option is in-, at- or out-of-the-money it is necessary to compare the exercise price of the option to the market price of the underlying asset. The premium and hence the time value are not taken into consideration.
a) a premium higher than the price of the underlying asset.
b) a premium lower than the price of the underlying asset.
c) an exercise price higher than the price of the underlying asset.
d) an exercise price lower than the price of the underlying asset.
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