The time value of a call is greatest when the stock price is very high.

Question

Quizplus · Accepted Answer

The time value of a call option is not solely determined by the stock price being very high. It is influenced by factors such as the strike price, time until expiration, volatility, and interest rates. The time value can be significant when the option is at-the-money or near-the-money, where the uncertainty about whether it will end up in- or out-of-the-money at expiration is greatest.

The Time Value of a Call Is Greatest When the Stock