FINRA General Securities Representative SIE Question # 36 Topic 4 Discussion
SIE Exam Topic 4 Question 36 Discussion:
Question #: 36
Topic #: 4
A customer writes a call for XYZ stock with a strike price of $35 and receives a premium of $7. The stock is currently trading at $40. What is the time value of this option?
Time value= Total premium - Intrinsic value = $7 - $5 =$2.
B is correctbecause $2 represents the time value.
A,C, andDare incorrect because they miscalculate the time value based on the option's total premium.
[Reference:SIE Study Guide, Chapter 8: Options Pricing, ]
Contribute your Thoughts:
Chosen Answer:
This is a voting comment (?). You can switch to a simple comment. It is better to Upvote an existing comment if you don't have anything to add.
Submit