Chapter 03 · Section 3.1

Time Value

                     Option A          Option B          Option C 
   
Option type:         American Call     American Call     American Call  
Exercise price:      $ 290             $ 290             $ 290         
Underlying asset:    stock A           stock A           stock A        
Price of stock A:    $ 300             $ 300             $ 300          
Expiration date:     March             June              September     
Today's date:        March             March             March  

Time value of the above options is:

a) the same in options A, B and C.
b) the same in options A and B.
c) the same in options A and C.
d) the same in options B and C.
• e) different in options A, B and C.
  Yes. Time value cannot be the same for the three options since they all have different maturities. Continue

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