The intrinsic value of an in-the-money put option is equal to
A) the stock price minus the exercise price.
B) the put premium.
C) zero.
D) the exercise price minus the stock price.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The intrinsic value of an in-the-money put option is calculated as the exercise price minus the stock price. This is because a put option gives the holder the right to sell the underlying asset at the exercise price, so if the current stock price is below the exercise price, the option has intrinsic value equal to the difference.

The Intrinsic Value of an In-The-Money Put Option Is Equal