A put option on ABC stock currently sells for $4.00.The exercise price and the stock price is $60.The put option has a delta of 0.5.If within a short period of time the stock price increases to $60.10,what would be the change in the price of the put option?
A)increases by $0.05
B)decreases by $0.05
C)increases by $0.10
D)decreases by $0.10

Question

Quizplus · Accepted Answer

The delta of a put option is negative, indicating that the option price moves inversely to the stock price. With a delta of 0.5, a $0.10 increase in stock price would decrease the put option price by $0.05.

A Put Option on ABC Stock Currently Sells for $4