As an option approaches its expiration date, the value of the option approaches:
A) the intrinsic value.
B) the price of the underlying asset.
C) zero.
D) infinity.

Question

Quizplus · Accepted Answer

As an option approaches its expiration date, its value converges towards its intrinsic value, which is the difference between the option's strike price and the underlying asset's current price, for in-the-money options. Out-of-the-money options approach a value of zero.

As an Option Approaches Its Expiration Date, the Value of the Option