A put option increases in value when the stock price decreases.

Name: A put option increases in value when the stock price decreases.
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Question

Quizplus · Accepted Answer

A put option gives the owner the right, but not the obligation, to sell a stock at a certain price (strike price) within a certain time frame. When the stock price decreases, the option becomes more valuable because the owner can sell the stock at the higher strike price and make a profit. Therefore, the value of the put option increases when the stock price decreases.

A Put Option Increases in Value When the Stock Price