The higher the existing market price of the underlying financial instrument relative to the exercise price, the higher the put option premium, other things being equal.

Question

The higher the existing market price of the underlying financial instrument relative to the exercise price, the higher the put option premium, other things being equal. ​

Quizplus · Accepted Answer

The premium of a put option typically decreases as the market price of the underlying asset increases relative to the exercise price, because the option becomes less likely to be exercised profitably.

The Higher the Existing Market Price of the Underlying Financial