If the strike price increases then the: [Assume everything else remaining the same]
A) Value of the put option increases and that of the call option decreases
B) Value of the put option decreases and that of the call option increases
C) Value of both the put option and the call option increases
D) Value of both the put option and the call option decreases

Question

Quizplus · Accepted Answer

The strike price is the price at which the underlying asset can be bought or sold. An increase in the strike price makes it less likely that the option will be exercised, as it is now more expensive to buy or sell the underlying asset. This leads to a decrease in the value of call options, which give the right to buy the asset, and an increase in the value of put options, which give the right to sell the asset. Therefore, choice A is the correct answer.

If the Strike Price Increases Then The: [Assume Everything Else