The ____ the existing spot price relative to the strike price, the ____ valuable the call options will be.
A)higher; less
B)higher; more
C)lower; less
D)lower; more

Question

Quizplus · Accepted Answer

When the existing spot price is higher relative to the strike price, the call option becomes more valuable since the holder can buy the underlying asset for a lower price and then sell it at a higher market price. Conversely, when the spot price is lower than the strike price, the call option becomes less valuable as there is no incentive for the holder to exercise the option.

The ____ the Existing Spot Price Relative to the Strike