Before expiration the time value of an out-of-the money share option is ________.
A)equal to the share price minus the exercise price
B)equal to zero
C)negative
D)positive

Question

Quizplus · Accepted Answer

The time value of an out-of-the-money option is positive before expiration because there is still a chance that the option could become profitable if the underlying asset's price moves favorably.

Before Expiration the Time Value of an Out-Of-The Money Share