If we have a stock selling for $95.00 and a call option for this stock has a strike price of $82.00 and an option price of $13.60:
A) the intrinsic value of the option is $0.60 and the time value of the option is $13.00.
B) the intrinsic value is $82.00 and the time value of the option is $13.60.
C) the intrinsic value of the option is $13.00 and the time value of the option is $0.60.
D) the intrinsic value is $0 since the option is out of the money.

Question

Quizplus · Accepted Answer

The intrinsic value of a call option is the stock price minus the strike price, which is $95.00 - $82.00 = $13.00. The time value is the option price minus the intrinsic value, which is $13.60 - $13.00 = $0.60.

If We Have a Stock Selling for $95