The Investor's Guidebook to Derivatives by Stuart R. Veale

Author:Stuart R. Veale [Veale, Stuart R.]
Language: eng
Format: epub
ISBN: 9781101633663
Publisher: Penguin Group US
Published: 2013-09-02T16:00:00+00:00

FIGURE 11.6

Option Prices

The options with strike prices below $100 are in the money and have intrinsic value. The:

$85 calls have $15.00 intrinsic value.

$90 calls have $10.00 intrinsic value.

$95 calls have $5.00 intrinsic value.

$100 calls have $0.00 intrinsic value.

$105 calls have $0.00 intrinsic value.

The option’s premium minus the intrinsic value is equal to the option’s time value:

The 4M $90 call has a premium of $15.50.

$15.50 minus $10 intrinsic value equals $5.50 time value.

The 7M $110 call has a premium of $4.00.

$4.00 minus $0 intrinsic value equals $4.00 time value.

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