When a stock price appreciates by a certain percentage, a call option on the same stock appreciates by a lower percentage amount.

Question

Quizplus · Accepted Answer

This statement is false. When a stock price appreciates, the value of a call option on the same stock also appreciates, but the percentage increase may not necessarily be lower. The percentage increase in the value of a call option is determined by other factors such as the strike price, time to expiration, and implied volatility.

When a Stock Price Appreciates by a Certain Percentage, a Call