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

Question

Quizplus · Accepted Answer

At expiration, the value of an option is equal to the intrinsic value, which is the difference between the stock price and the strike price for a call option or the strike price and the stock price for a put option. The time value of the option diminishes to zero at expiration. Therefore, the best choice is D where the value of an option is equal to the intrinsic value.

At Expiration, the Value of an Option