You would expect the price quote for a put option to be at least $10 if the put had an exercise price of $40 and the underlying stock was selling for $50.

Question

Quizplus · Accepted Answer

The value of a put option is determined by its intrinsic value and time value. In this case, with the stock selling for $50 and the exercise price being $40, the put option is out of the money and would not have an intrinsic value of $10 or more. Its price would be based mainly on its time value and volatility, not the difference between the exercise price and the stock price.

You Would Expect the Price Quote for a Put Option