If the value of a common stock increases the value of an option to buy that stock should also increase.

Question

Quizplus · Accepted Answer

When the value of a common stock increases, the likelihood of the option being profitable also increases, which in turn increases the value of the option. This is because the option holder has the right to buy the stock at a lower price than the current market price, allowing them to profit from the increase in stock value.

If the Value of a Common Stock Increases the Value