A call option with a strike price of $78 on a stock selling at $97 costs...
A call option with a strike price of $78 on a stock selling at $97 costs $21.5. What are the call option’s intrinsic and time values? what are the Intrinsic value and Time value?
Homework Answers
Intrinsic Value of Call Option = Max(0, (S - X))
So,
Intrinsic Value of Call Option = (97 - 78)
Intrinsic Value of Call Option = $19
Value of Call Option = Intrinsic Value + Time Value
So,
Time Value of Call Option = 21.50 - 19
Time Value of Call Option = $2.50
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