In reality, an option's value will equal its intrinsic value only at expiration. At all other times, the option's premium or price will exceed its intrinsic value. A major reason for this is/are _____________.
A) marketability
B) future expectations
C) trade restrictions
D) brand

Question

Quizplus · Accepted Answer

The option's premium or price will exceed its intrinsic value due to future expectations. As the underlying asset's value changes, the option's premium may also change in anticipation of the underlying asset's price movement. This is known as the option's time value, which reflects the possibility of future price movements that could make the option profitable.

In Reality, an Option's Value Will Equal Its Intrinsic Value