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Homework answers / question archive / Gamuda stock is trading at $41
Gamuda stock is trading at $41. Call options with a strike price of $44 are priced at $0.40. Calculate the intrinsic value and the time value of the option
Intrinsic value:
Here the call option is out of the money i.e current trading price of the stock is less than the strike price.
Every out of the money options have no intrinsic value.
So here INTRINSIC VALUE is ZERO.
Time value:
Time value = option premium- intrinsic value
Time value = 0.40- 0
Time value = $0.40
