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At expiration, an option 1. is worth its intrinsic value 2. has no time premium 3....

At expiration, an option

1. is worth its intrinsic value

2. has no time premium

3. may be exercised by the buyer but not by the writer

a.

1 and 2

b.

1 and 3

c.

2 and 3

d.

1, 2, and 3
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Answer #1

Answer: Option d is correct
Option Premium=Time Value + Intrinsic Value
At expiry, time value=0, so the option premium is equal to Intrinsic Value
At expiration, an option may be exercised by the buyer (will have the right but not obligation to exercise the option) but not by the writer

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