Chapter 03 · Section 3.1

Expiration and Exercise Price

         Oct.   Nov.   Dec.   Jan.   Feb.
Stock X   95     97     98     99    100
Stock Y   95    125     70    145    100

As long as expiration date and exercise price are the same,

a) A call/put on stock X is less expensive than a call/put on stock Y.
Yes. Stock Y is more volatile than stock X. Volatility has a positive influence on the time value of both calls and puts. Continue
b) A call/put on stock X is more expensive than a call/put on stock Y.
c) A call on stock X is more expensive than a call on stock Y and a put on stock X is less expensive than a put on stock Y.
d) A call on stock X is less expensive than a call on stock Y and a put on stock X is more expensive than a put on stock Y.