Asked by Samantha Matias on Jul 09, 2024
Verified
The price of a stock put option is __________ correlated with the stock price and __________ correlated with the strike price.
A) positively; positively
B) negatively; positively
C) negatively; negatively
D) positively; negatively
E) not; not
Strike Price
The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.
- Comprehend the inverse or direct correlations that exist between the pricing of options and variables such as the price of the stock, the time remaining to expiration, the volatility of the stock, and the strike price.
Verified Answer
NT
Nguyen Thi Lan Anh 002711Jul 13, 2024
Final Answer :
B
Explanation :
The price of a stock put option is negatively correlated with the stock price (as the stock price decreases, the value of the put option increases) and positively correlated with the strike price (as the strike price increases, the value of the put option also increases).
Learning Objectives
- Comprehend the inverse or direct correlations that exist between the pricing of options and variables such as the price of the stock, the time remaining to expiration, the volatility of the stock, and the strike price.