(SOLVED) Suppose you buy a put option on ABC Inc. for $2.00 that expires in three months with a strike price of $11.00. Currently ABC is trading at $10.35 per share.

Discipline: Finance

Type of Paper: Question-Answer

Academic Level: Undergrad. (yrs 1-2)

Paper Format: APA

Pages: 1 Words: 31

Question

Suppose you buy a put option on ABC Inc. for $2.00 that expires in three months with a strike price of $11.00.

Currently ABC is trading at $10.35 per share.

The intrinsic and time value on this option is closest to:


Expert Solution Preview


Intrinsic Value Of Put = Max(Strike Price- Spot Price ,0)


= Max(11 - 10.25,0)


= 0.75

Time Value = ............