Asked by Yamile Espinosa on May 16, 2024
Verified
The intrinsic value of an out-of-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.
Out-of-the-money
A term used in options trading to describe an option that has no intrinsic value. A call option is out-of-the-money if the stock price is below the strike price, and a put option is out-of-the-money if the stock price is above the strike price.
Intrinsic Value
The intrinsic worth of an asset, determined by the underlying true value encompassing all elements of the business, covering both tangible and intangible factors.
Put Option
A financial contract that gives the buyer the right, but not the obligation, to sell an asset at a specified price within a specific time period.
- Ascertain and determine the intrinsic and duration values of options.
Verified Answer
Learning Objectives
- Ascertain and determine the intrinsic and duration values of options.
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