Before expiration, the time value of an at-the-money put option is always
A) equal to zero.
B) equal to the stock price minus the exercise price.
C) negative.
D) positive.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The time value of an at-the-money put option is always positive before expiration because it represents the potential for the option to gain in value with time as market conditions change.

Before Expiration, the Time Value of an At-The-Money Put Option