Before expiration, the time value of an out-of-the-money stock option is ________.

A) equal to the stock price minus the exercise price
B) equal to zero
C) negative
D) positive

Time Value

The additional amount an investor is willing to pay for an option or other financial product based on its potential to increase in value over time.

Out-of-the-Money

Describes an option that would not result in a profit if exercised immediately because its strike price is less favorable compared to the market price of the underlying asset.

Exercise Price

The specified price at which the holder of an option contract can buy (for a call option) or sell (for a put option) the underlying asset.