Which of these will increase the value of a call option? I.An increase in the market value of the underlying asset
II.An increase in the option's strike price
III.A decrease in the market value of the underlying asset
IV.A decrease in the option's strike price
A)I and II only
B)II only
C)II and III only
D)I and IV only
E)I only

Question

Quizplus · Accepted Answer

An increase in the market value of the underlying asset (I) makes it more likely that the option will be in-the-money, increasing its value. A decrease in the option's strike price (IV) also makes it more likely for the option to be in-the-money, thus increasing its value.

Which of These Will Increase the Value of a Call