Chapter 03 · Section 3.1

Underlying price increase

What effect would an increase in the price of the underlying increase asset have on the premium of an option?

• a) The Put premium would increase
  No. The call, or the right to buy at a specified exercise price, is worth more the higher the price of the underlying asset.
  b) The Call premium would increase
  c) The Put premium would decrease
  d) The Call premium would decrease
  e) a and d
  f) b and c

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