Question
In: Finance
A call option written on CBA has a strike price of $78 and trades at $3.42....
A call option written on CBA has a strike price of $78 and trades at $3.42. CBA share price is $81. The split up of option value into intrinsic value and time value is:
a)$3.00 intrinsic value and $0.42 time value
b)-$2.00 intrinsic value and $5.42 time value
c)$2.00 intrinsic value and $1.42 time value
d)zero intrinsic value and $3.42 time value
Solutions
Expert Solution
Intrinsic Value of Call Option = Stock Price - Strike Price
Intrinsic Value = 81 - 78 = $3
Time Value = Premium - Intrinsic value
Time Value = 3.42 - 3 = $0.42
$3.00 intrinsic value and $0.42 time value
jeff jeffy answered 2 years agoRelated Solutions
A call option written on CBA has a strike price of $78 and trades at $3.42....
A call option written on CBA has a strike price of $78 and
trades at $3.42. CBA share price is $81. The split up of option
value into intrinsic value and time value is:
$3.00 intrinsic value and $0.42 time value
-$2.00 intrinsic value and $5.42 time value
$2.00 intrinsic value and $1.42 time value
zero intrinsic value and $3.42 time value
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