A 6-month call has a strike price of $50. The underlying stock is priced at $51.30 and the option premium on the call is $1.80. What is the per share time value of the call?
A)$0
B)$.40
C)$.50
D)$.60
E)$3.10

Question

Quizplus · Accepted Answer

The intrinsic value of the call option is the difference between the strike price and the underlying stock price, which in this case is $1.30 ($51.30 - $50 = $1.30). 
The time value of the option is the option premium minus the intrinsic value, which is $1.80 - $1.30 = $0.50. 
Therefore, the per share time value of the call is $0.50. 
Therefore the answer is (C).

A 6-Month Call Has a Strike Price of $50