The intrinsic value of an at-the-money put option is equal to
A) the stock price minus the exercise price.
B) the put premium.
C) zero.
D) the exercise price minus the stock price.
E) None of these is correct

Question

Quizplus · Accepted Answer

The intrinsic value of a put option is the difference between the strike price and the stock price, only if the stock price is lower than the strike price. However, in the case of an at-the-money put option, the stock price is equal to the exercise price, hence the intrinsic value is zero. Therefore, the correct answer is C.

The Intrinsic Value of an At-The-Money Put Option Is Equal