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Hello,
Can you please expand on the time value and intrinsic value as shown in the statement below:
“The value of an option prior to expiry consists of time value, and may also consist of intrinsic value if the option is in-the-money.”
I thought I have gotten the understanding of the options until I read the task below.Expected futures price = 100 -4.4-0.16=95.44
Would 4.4% considered intrinsic value even though it’s independent factor which given in the task.
The task 55 Daikon from BPP revision kit.Thank you so much for your response.
DNo – this is nothing to do with intrinsic values or time value.
The options are the right to deal in futures on the date of the transaction.
The futures price on the date of the transaction will be the equivalent to 4.4%, so 100 – 4.4, as adjusted by the basis which has been calculated as being 0.16.
No – this is nothing to do with intrinsic values or time value.
The options are the right to deal in futures on the date of the transaction.
The futures price on the date of the transaction will be the equivalent to 4.4%, so 100 – 4.4, as adjusted by the basis which has been calculated as being 0.16.
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