(SOLVED) Suppose you buy a put option on ABC Inc. for $2.00 that expires in three months with a strike price of $10.00. 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: 25

Question

Suppose you buy a put option on ABC Inc. for $2.00 that expires in three months with a strike price of $10.00.

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 option

= strike price - underlying price

= $0.00 [10-10.35] {cannot be negative}


Time value = .....