Both call and put option premiums are affected by the level of the existing spot price relative to the strike price; for example, a high spot price relative to the strike price will result in a relatively high premium for a call option but a relatively low premium for a put option.

Question

Quizplus · Accepted Answer

This statement is correct. The premium for a call option will increase as the spot price goes up, while the premium for a put option will decrease as the spot price increases. The opposite will be true if the spot price is lower than the strike price.

Both Call and Put Option Premiums Are Affected by the Level