Final answer:
The time value of the Cisco June 35 call option, calculated as the option's premium minus the intrinsic value, is $0.5. Therefore correct option is D
Step-by-step explanation:
The time value of the option is the difference between the option's premium and the intrinsic value of the option. The intrinsic value is calculated as the difference between the stock's current price and the strike price of the option, given that the difference is positive.
Since Cisco's current stock price is $40 and the strike price of the June 35 call option is $35, the intrinsic value is $40 - $35 = $5.
The option's premium is quoted at $5.5.
Therefore, the time value of the option is the option's premium minus the intrinsic value, which is $5.5 - $5 = $0.5.