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SIE: Options
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?

  1. A$30
  2. B$0
  3. C$3✓ Correct answer
  4. 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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