SIE practice questionmediumIntrinsic value
A put option with a $30 strike price is trading on a stock currently worth $27. What is the intrinsic value of the put?
- A$30
- B$0
- C$3✓ Correct answer
- D$27
Explanation
Why C — $3
Intrinsic value for puts is strike price minus market price ($30 - $27 = $3). The other figures ignore the correct calculation or misstate the definition.
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