A 6-month put option on Smith Corp.'s stock has a strike price of $46.00 and sells in the market for $8.50.Smith's current stock price is $40.00.What is the option premium? Do not round your intermediate calculations.
?
A) $2.90
B) $2.50
C) $2.18
D) $2.28
E) $2.93

Question

Quizplus · Accepted Answer

11ea856c_8b2a_0353_9aec_8923e29042a2_TB1222_00 Exercise value = Strike price ? Current price of stock
Exercise value = $46.00 ? $40.00
Exercise value = $6.00
Option premium = Option value ? Exercise value
Option premium = $8.50 ? $6.00
Option premium = $2.50

A 6-Month Put Option on Smith Corp