You recently purchased six put option contracts on a stock with an exercise price of $45 and an option premium of $.65. What is the total intrinsic value of these contracts if the stock is currently selling for $46.20 a share?

Question

Quizplus · Accepted Answer

The intrinsic value of a put option is calculated as the exercise price minus the current stock price, but only if the result is positive. Since the stock price ($46.20) is higher than the exercise price ($45), the intrinsic value is $0 because the options are out of the money.

You Recently Purchased Six Put Option Contracts on a Stock