If the stock price increases, the price of a put option on that stock __________, and that of a call option __________.
A) decreases; increases
B) decreases; decreases
C) increases; decreases
D) increases; increases
E) does not change; does not change

Question

Quizplus · Accepted Answer

The price of a put option typically decreases when the stock price increases because the option becomes less likely to be exercised profitably. Conversely, the price of a call option increases as the stock price rises because the option becomes more likely to be exercised profitably.

If the Stock Price Increases, the Price of a Put