What is the intrinsic value of a foreign currency option?
A)the difference between the spot rate and the strike price
B)the gain on the option if it was exercised immediately
C)the chance that a currency will rise over time to make the option in the money
D)the difference between a call option and a put option

Question

Quizplus · Accepted Answer

The intrinsic value of a foreign currency option is the gain that would be realized if the option were exercised immediately, which is the difference between the current spot rate and the strike price, but only if this difference is positive for a call option or negative for a put option.

What Is the Intrinsic Value of a Foreign Currency Option