A stock is currently priced at $26 a share while the $30 put option is priced at $5.22. The put option delta is -.25. What is the approximate put price if the stock increases in value to $27?

Question

Quizplus · Accepted Answer

The put option delta of -0.25 indicates that for every $1 increase in the stock price, the put option price decreases by approximately $0.25. If the stock price increases from $26 to $27, the put option price will decrease by $0.25. Therefore, the new put price is $5.22 - $0.25 = $4.97.

A Stock Is Currently Priced at $26 a Share While