Question

The time value of an option is equal to the premium price listed minus the difference between ______ and ______.

A) The strike price and the market price.
B) The expiration date and the issue date.
C) The intrinsic value and the extrinsic value.
D) The call option and the put option.

Answer 1

The time value of an option is equal to the premium price listed minus the difference between the intrinsic value and the extrinsic value.

Step-by-step explanation:

The time value of an option is equal to the premium price listed minus the difference between the intrinsic value and the extrinsic value.Intrinsic value refers to the inherent value of an option based on the difference between the strike price and the market price. Extrinsic value, also known as time value, is the additional value of an option beyond its intrinsic value.Therefore, the correct answer is C) The intrinsic value and the extrinsic value.