Option Value Changes Are Classified as Intrinsic Value Changes and Time

Multiple Choice

Option value changes are classified as intrinsic value changes and time value changes. Assume a company designates changes in intrinsic value as the hedge, with changes in time value reported in income. For options used to hedge a forecasted sale of merchandise, when does the change in option intrinsic value impact income?

A) When the value changes occur.
B) Never.
C) When the merchandise sale is recorded.
D) When the options are sold.