Asked by Ariana Rinehart on Jul 07, 2024
Verified
At expiration, the time value of an at-the-money call option is always
A) positive.
B) equal to zero.
C) negative.
D) equal to the stock price minus the exercise price.
Time Value
The portion of an option's premium that is attributable to the amount of time remaining until the expiration of the option contract.
At-The-Money
A situation in options trading where the option's strike price is equal to the market price of the underlying asset.
Call Option
A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time period.
- Identify the effect of expiry on the time value for both call and put options.
Verified Answer
Learning Objectives
- Identify the effect of expiry on the time value for both call and put options.
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