All other things held constant, premiums on put options will increase when the ________.
A) exercise price falls
B) volatility of the underlying asset falls
C) term to maturity increases
D) term to maturity decreases

Question

Quizplus · Accepted Answer

The premiums on put options tend to increase as the term to maturity increases because there is a greater chance that the option will end up in-the-money, given more time for the underlying asset's price to move.

All Other Things Held Constant, Premiums on Put Options Will