Option values may be viewed as the sum of intrinsic value plus time or volatility value. The

Question:

Option values may be viewed as the sum of intrinsic value plus time or “volatility” value.

The volatility value is the right not to exercise if the stock price moves against you. Thus, the option holder cannot lose more than the cost of the option regardless of stock price performance. p-69

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

ISE Investments

ISBN: 9781266085963

13th International Edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus

Question Posted: