If we have a stock selling for $95.00 and a call option for this stock has a strike price of $82.00 and an option price of $13.60:
A)The intrinsic value of the option is $0.60 and the time value of the option is $13.00.
B)The intrinsic value is $82.00 and the time value of the option is $13.60.
C)The intrinsic value of the option is $13.00 and the time value of the option is $0.60.
D)The intrinsic value is $0 since the option is out of the money.

Question

Quizplus · Accepted Answer

The intrinsic value is the difference between the stock price ($95.00) and the strike price ($82.00), which is $13.00. The time value is the option price ($13.60) minus the intrinsic value ($13.00), which is $0.60.

If We Have a Stock Selling for $95