The formula below shows the value decomposition of an option:

Option value = Intrinsic value + Time value

Assume the share price of NTK is currently $18 and the company will not pay dividends in the next year.

For a European option on NTK with a strike price of $20 and one year to expiration, its market price should be

Select one:

a. higher than $18.

b. equal to $20.

c. equal to $2.

d. higher than $2.

e. lower than $2.