Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Call and put options increase in price if the time to expiry is increased. This is because an option gives the holder the right, but not the obligation, to buy or sell an underlying asset at a fixed price during a specific time period. As the time to expiration increases, the probability of the option ending up in the money increases, which in turn increases the option's value. The other choices are incorrect as they have the opposite effect on the price of options.

Which of the Following Statements Is Correct