[SIE] 39, Options - Intrinsic and Time Value
This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and CFP designation. He is passionate about opening up information to help everyone prepare better for financial certification exams. This episode covers content for the SIE Exam.
In this episode you will learn:
- The two components of an option's premium: intrinsic value and time value.
- How to determine if a call or put option is in-the-money, at-the-money, or out-of-the-money.
- The method for calculating an option's intrinsic value, and remembering it can never be negative.
- What time value represents and how it is affected by time to expiration.
- Common question formats and traps on the SIE exam related to option valuation.
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