You own a put option contract on Oliver Brothers stock with an exercise price of $37.50. What is the intrinsic value of your investment if Oliver stock is currently selling for $32.90 a share?
A) -$460
B) -$230
C) $0
D) $230
E) $460

Question

Quizplus · Accepted Answer

The intrinsic value of a put option is calculated as the exercise price minus the current stock price. Here, it is $37.50 - $32.90 = $4.60 per share. Since a standard option contract covers 100 shares, the total intrinsic value is $4.60 * 100 = $460.

You Own a Put Option Contract on Oliver Brothers Stock