All else the same, an increase in the time to maturity will __________ the price of a call option and __________ the price of a put option.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase
E) not affect; not affect

Question

Quizplus · Accepted Answer

An increase in the time to maturity generally increases the price of both call and put options. This is because a longer time to maturity gives the underlying asset more time to move in a direction that is favorable for the option holder, increasing the option's value.

All Else the Same, an Increase in the Time to Maturity