A put option on ABC stock currently sells for $4.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 indicates how much the option's price will change for a $1 change in the stock price. A delta of 0.5 means the option price will decrease by $0.05 for a $0.10 increase in the stock price.

A Put Option on ABC Stock Currently Sells for $4