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?
e) a and d
No. This is the wrong way round. The call, or the right to buy at the a specifed exercise price, is worth more the higher the price of the underlying asset. For the put it is the opposite.
f) b and c
a) The Put premium would increase
b) The Call premium would increase
c) The Put premium would decrease
d) The Call premium would decrease
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