Selling a call option is generally more valuable than exercising the option because of the option's:
A) riskless value.
B) intrinsic value.
C) standard deviation.
D) exercise price.
E) time premium.

Question

Quizplus · Accepted Answer

Selling a call option allows the seller to receive the time premium, which is the extra amount that buyers of options are willing to pay for the possibility of the underlying asset's price increasing. Exercising the option, on the other hand, only allows the buyer to receive the intrinsic value, which is the difference between the underlying asset's current price and the exercise price. Therefore, selling the call option is generally more valuable than exercising the option.

Selling a Call Option Is Generally More Valuable Than Exercising