Asked by tushig amarjargal on Jun 06, 2024
Verified
The value of a stock put option is positively related to the following factors except
A) the time to expiration.
B) the striking price.
C) the stock price.
D) All of the options are correct.
E) None of the options are correct.
Striking Price
The price at which the holder of an option can buy (in case of a call option) or sell (in case of a put option) the underlying security when the option is exercised.
Stock Put Option
A financial derivative that gives the holder the right, but not the obligation, to sell a stock at a specified price within a specified time period.
Stock Price
The price at which a particular stock is bought or sold on the market.
- Familiarize oneself with the rudimentary principles of option pricing and valuation.
- Outline the major determinants of option values, focusing on the significance of the risk-free rate, the variability of stock prices, and the period until expiration.
Verified Answer
RJ
Rosalia JimenezJun 11, 2024
Final Answer :
C
Explanation :
The value of a stock put option increases with the time to expiration and the striking price, but decreases as the stock price increases. Therefore, the stock price is the factor to which the value of a stock put option is negatively related.
Learning Objectives
- Familiarize oneself with the rudimentary principles of option pricing and valuation.
- Outline the major determinants of option values, focusing on the significance of the risk-free rate, the variability of stock prices, and the period until expiration.