For a call option on IBM, if the current market price is $130 per share, the strike price is $120 per share, and the option value is $15 per share, how much is this option’s intrinsic value and time value? $10, $5 $0, $5 $0, $15 $5, $10
For a call option on IBM, if the current market price is $130 per share, the strike price is $120 per share, and the option value is $15 per share, how much is this option’s intrinsic value and time value?
- $10, $5
- $0, $5
- $0, $15
- $5, $10
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Do I understand correct
"In date of long call option, option value or intrinsic value = option premium or $5 and in expiration date , option value or intrinsic value = option premium + gain from exercise option in case that market price above strike price and will be zero if market price lower than strike price ,does time value ($5 in this case) was included in option premium or not. If not correct, Could you explain and give example to me to further understand about option value and intrinsic value.
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