The intrinsic value of put option is ________________?
Correct answer: B. exercise price - stock price
- A. exercise price ⁄ stock price
- B. exercise price - stock price
- C. exercise price + stock price
- D. exercise price x stock priceCommodities & Futures Trading
Explanation
A put is valuable intrinsically when the exercise price exceeds the stock price, giving the basic expression exercise price minus stock price. More precisely, put intrinsic value is max(exercise price minus stock price, 0).
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