Question

The time value of 6-month European-style call options is highest for

Answer 1

The time value of 6-month European -style call option is highest for at-the-money option with zero intrinsic value.

Time value of option is also known as the extrinsic value which maainly depends on two factors such as (1) time remaining until expiration and

(2) how close the option price is to the strike price.

As there is no difference between strike price and underlying price in at-the-money option. Thus, the time value of 6-month European style option is highest for at-the-money option.