The investor’s exposure to the option is not relevant to the price one
should pay to buy or ask to sell the option.
Derivatives MCQ - Derivatives Section 2
The higher the stock price and the lower the exercise price, the more
valuable is the call.
Although the longer time benefits the holder of the option, it also has a
cost in that exercise of a longer-term put comes much later. Therefore,
the receipt of the exercise price is delayed.
Option 2 will most likely have the highest value because it has a longer
time to expiration relative to Option 1 and a lower exercise price relative
to Option 3.
