SIE practice questionmediumIntrinsic value
A DEF Jul 60 put is trading for $3. DEF stock is currently $55. What is the intrinsic value of the put?
- A$3
- B$5✓ Correct answer
- C$0
- D$2
Explanation
Why B — $5
Put intrinsic value = strike - current price = $60 - $55 = $5. The $3 is total premium; intrinsic is $5.
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