A company bought debt securities, classified as available-for-sale, on August 1, 2023, for $105,000. On November 1, 2023, the market value of the securities is $100,000, and the company buys put options, expiring on March 1, 2024, for $500, locking in the selling price of the securities at $100,000. The options qualify as a fair value hedge of the securities. All income effects of the securities and the hedge are reported in other gains (losses) and the change in option time value is reported in income as incurred. At December 31, 2023, the reporting year-end, the market value of the securities is $98,000, and the options have a fair value of $2,600. On March 1, 2024, when the market value of the securities is $95,000, the company sells the options for their intrinsic value of $5,000, and also sells the securities. What is the time value of the options on December 31, 2023?

Select one:

a. $0

b. $2,600

c. $2,000

d. $600