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

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