Which of the following is true of the market price of an options contract over time?
A)It is set at time 0.
B)It is fixed over the life of the contract.
C)It changes based on the market value of the underlying asset.
D)It increases with time to expiration.

Question

Quizplus · Accepted Answer

The market price of an options contract changes based on the market value of the underlying asset. Factors that affect the price of an option include the current market price of the underlying asset, the strike price of the option, the time remaining until expiration, and the volatility of the underlying asset. The market price of an options contract is not fixed, but rather fluctuates based on various market conditions. Therefore, option prices can go up or down over time, depending on changes in the underlying asset's market value, among other factors.

Which of the Following Is True of the Market Price