At expiration, the time value of an option:
A) is equal to the intrinsic value.
B) is greater than the intrinsic value.
C) is zero.
D) is less than the intrinsic value.

Question

Quizplus · Accepted Answer

The time value of an option is the premium paid for the right to buy or sell the underlying asset. At expiration, the option either has intrinsic value (if it is in-the-money) or it has no value (if it is out-of-the-money). Therefore, the time value of the option becomes zero at expiration.

At Expiration, the Time Value of an Option