Question

xyz stock's current market price: $26.84 xyz put option exercise price: $30.00 xyz put option market price: $6.89 given the above information regarding xyz stock, identify which of the following is correct. a) the time value of the put option is $3.73. b) all of these. c) the intrinsic value of the put option is $3.16. d) a holder of the put option would consider exercising the option.

Answer 1

A) Each of these assertions is true A person who owns a put option might think about exercising the option, The put option has an intrinsic value of $3.16, The put option has a time value of $3.73.

What is the Put Option?

A put option, also known as a "put," is a contract that gives the buyer of an option the right, but not the obligation, to sell a certain amount of an underlying security—also known as selling short—at a predetermined price within a predetermined time frame. The strike price is the predetermined price at which the buyer of the put option can sell the underlying security.

The underlying assets of put options can be stocks, currencies, bonds, commodities, futures, or indexes. A call option, on the other hand, grants the holder the right to purchase the underlying security at a predetermined price either on or before the option contract's expiration date.

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