CFA Practice Question

There are 227 practice questions for this study session.

CFA Practice Question

Examining the above diagram, which of the following statements would be false?
A. The time value of this option becomes the lowest when the option is at-the-money.
B. The delta of this option's value can never be negative.
C. This is a long call position. This diagram is a snapshot of the option on a day other than its expiration date.
Explanation: The time value of an option, be it a call or a put, is at its highest when the option is at-the-money.

Furthermore, we know that this diagram is a snapshot of the option on a day other than its expiration date because it still has time value. On the expiration day, the time value is zero.

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