Question22 A put option has a strike of $55, the underlying is at $51, and the market premium is $6.00. The intrinsic value and time value are respectively: Intrinsic = $4.00; Time = $2.00 Intrinsic = $2.00; Time = $4.00 Intrinsic = $0; Time = $6.00 Intrinsic = $6.00; Time = $0 ResetMaximum marks: 1 Flag question undefined单项选择题
A
Intrinsic = $4.00; Time = $2.00
B
Intrinsic = $2.00; Time = $4.00
C
Intrinsic = $0; Time = $6.00
D
Intrinsic = $6.00; Time = $0

Question

Question22 A put option has a strike of $55, the underlying is at $51, and the market premium is $6.00. The intrinsic value and time value are respectively: Intrinsic = $4.00; Time = $2.00 Intrinsic = $2.00; Time = $4.00 Intrinsic = $0; Time = $6.00 Intrinsic = $6.00; Time = $0 ResetMaximum marks: 1 Flag question undefined单项选择题

A

Intrinsic = $4.00; Time = $2.00

B

Intrinsic = $2.00; Time = $4.00

C

Intrinsic = $0; Time = $6.00

D

Intrinsic = $6.00; Time = $0

BlackTom AI · Accepted Answer

For a put option, intrinsic value = max(strike − underlying, 0). Here strike = $55 and underlying = $51, so intrinsic = 55 − 51 = $4.00.

Relevant concepts:
- Intrinsic value for a put is the amount by which the strike exceeds the current underlying price; it cannot be negative (if strike ≤ underlying, intrinsic = 0).
- Option premium (market price) = intrinsic value + time value (also called extrinsic value). Time value = premium − intrinsic.

Step-by-step calculation:
1. Compute intrinsic: 55 − 51 = 4. So intrinsic value = $4.00.
2. Given market premium = $6.00, compute time value: 6.00 − 4.00 = $2.00. So time value = $2.00.

Intermediate steps shown:
- Intrinsic = max(55 − 51, 0) = max(4, 0) = 4.
- Time value = Premium − Intrinsic = 6 − 4 = 2.

Why this answer is correct:
The put is in-the-money by $4 because exercising it allows selling at $55 while the market price is $51, yielding $4 immediate value. The remaining portion of the premium ($2) compensates for remaining time to expiration, volatility, and other extrinsic factors.

Why the other choices are incorrect:
- Intrinsic = $2; Time = $4 would imply strike − underlying = 2, but 55 − 51 = 4, so intrinsic cannot be $2.
- Intrinsic = $0; Time = $6 would imply the put is out-of-the-money or at-the-money (strike ≤ underlying), which is false since strike > underlying.
- Intrinsic = $6; Time = $0 would mean the premium equals intrinsic and there is no time value; that would require strike − underlying = 6 (i.e., underlying = 49), which is not the case.

Conclusion: Intrinsic = $4.00 and Time = $2.00, which matches the provided correct answer.

类似问题

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Question at position 1 Other things equal, a put option's value increases as the strike price increases TrueFalse

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