The value of a put option is negatively related to the
A)stock price.
B)volatility of the underlying stock price.
C)stock price and volatility of the underlying stock price.
D)exercise price.

Question

Quizplus · Accepted Answer

The value of a put option increases as the stock price decreases. This is because a put option gives the holder the right to sell the underlying stock at a predetermined price (strike price), and as the stock price decreases, the option becomes more valuable since the holder can sell the stock for a higher price than its current market value. Therefore, the value of a put option is negatively related to the stock price.

The Value of a Put Option Is Negatively Related to the