For European options,what is the effect of an increase in S_t? A)Decrease the value of calls and puts ceteris paribus B)Increase the value of calls and puts ceteris paribus C)Decrease the value of calls,increase the value of puts ceteris paribus D)Increase the value of calls,decrease the value of puts ceteris paribus

Question

Quizplus · Accepted Answer

An increase in the underlying asset's price (S_t) increases the value of calls because the option becomes more likely to finish in the money. Conversely, it decreases the value of puts since the option becomes less likely to be exercised profitably.

For European Options,what Is the Effect of an Increase in St

For European Options,what Is the Effect of an Increase in S_t