All other things held constant,premiums on call options will increase when the
A) exercise price falls.
B) volatility of the underlying asset falls.
C) term to maturity decreases.
D) futures price increases.

Question

Quizplus · Accepted Answer

When the exercise price of a call option falls, its intrinsic value increases, creating a higher probability of the option being exercised. As a result, the premium of the call option increases. The other options listed would have the opposite effect on call option premiums.

All Other Things Held Constant,premiums on Call Options Will Increase