We Have a Stock Selling for $90

question 103

Multiple Choice

We have a stock selling for $90.00.There is a put option for this stock with a strike price of $85 and an option price of $1.20:

• A)The intrinsic value of this option is $0.00 and the time value of the option is $1.20.
• B)The intrinsic value of this option is $90.00 and the time value of the option is $1.20.
• C)The intrinsic value of this option is -$5.00 and the time value of the option is $1.20.
• D)You cannot determine the intrinsic value or time value of the option since the strike price is less than the underlying asset price.