The premium on an existing put option should ____ when the underlying stock price increases.

Question

Quizplus · Accepted Answer

When the underlying stock price increases, the value of the put option decreases as it gives the option holder the right to sell the stock at a strike price, which is now higher than the current market price. This decrease in the value of the put option causes the premium to decline. Therefore, the correct choice is B, decline.

The Premium on an Existing Put Option Should ____ When