Which one of the following is equal to the option premium minus the intrinsic value?
A) parity value
B) payoff value
C) time value
D) strike value
E) profit

Question

Quizplus · Accepted Answer

The option premium represents the total cost of buying an option, which is the sum of both the intrinsic value (the profit that could be made if exercising the option immediately) and the time value (the additional value based on the potential for price movement before expiration). Therefore, if we subtract the intrinsic value from the option premium, the remaining value must be the time value.

Which One of the Following Is Equal to the Option