The price of an option is always somewhat greater than its intrinsic value, since there is always some chance that the intrinsic value will rise between the present and the expiration date.

Question

Quizplus · Accepted Answer

The statement is correct. The price of an option consists of its intrinsic value (if it has any) plus its time value, which reflects the probability that the underlying asset's price will move in a favorable direction before the option expires. Therefore, the price of an option will be higher than its intrinsic value alone in most cases, since there is always some chance that the asset's price will change in the future.

The Price of an Option Is Always Somewhat Greater Than