What is the value of a CKS Food's option prior to expiration if the exercise price is $20 and the current stock price is $20?
A) Greater than $0
B) $0
C) Less than $0
D) Cannot be valued

Question

Quizplus · Accepted Answer

An option's value prior to expiration is never zero as long as there is time until expiration, due to the time value of money. Even if the exercise price and the current stock price are the same, the possibility of the stock price moving before expiration gives the option value.

What Is the Value of a CKS Food's Option Prior