Chapter 03 · Section 3.1
Time Value
LISTED U.S. OPTIONS The Wall Street Journal
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Wednesday June 12, 1995 3:00 p.m. New York Time
Prices of all options. Sales unit usually is 100 shares.
Security description includes exercise price.
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CBOE Strike Calls-last Puts-last
Price
Jun Jul Aug Jun Jul Aug
Coke 45 r r r s 1/4
54 1/4 50 r r r r 5/8
54 1/4 55 5/8 2 1/4 15/16 1 11/16 2 1/8
54 1/4 60 7/8 r 6 1/4 6 1/4 r
What is the price of the option contract with the highest time value?
a) -2.25
b) -2
c) -2.14
d) -6.14
e) -0.78
f) -0.875
Time value is the difference between the price of the option (premium) and its intrinsic value.
Call option intrinsic value is the price of the underlying less the strike price. Put option intrinsic value is the strike price less the price of the underlying.
In stock option tables, premiums are given on a one share basis although the usual stock option contract size is 100 shares.