A 6-month call has a strike price of $30. The underlying stock is priced at $32.80 and the option premium on the call is $3.40. What is the per share time value of the call?
A) $0.00
B) $0.60
C) $1.40
D) $2.80
E) $3.60

Question

Quizplus · Accepted Answer

The intrinsic value of the call is $2.80 (the current stock price of $32.80 minus the strike price of $30). Therefore, the time value is $0.60 ($3.40 premium - $2.80 intrinsic value).

A 6-Month Call Has a Strike Price of $30