For European options, what of the effect of an increase in the strike price E?
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 strike price decreases the value of call options because it becomes less likely that the option will be exercised profitably. Conversely, it increases the value of put options as it becomes more likely that the option will be exercised profitably.

For European Options, What of the Effect of an Increase