Question

Which of these will increase the value of a call option? I. An increase in the...

Which of these will increase the value of a call option?

I. An increase in the market value of the underlying asset

II. An increase in the option's strike price I

II. A decrease in the market value of the underlying asset

IV. A decrease in the option’s strike price

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Answer #1

Value of Call Option will increase when the Price of the underlying asset increases. The Value of call Option is the Intrinsic value of the Option Plus the Time Value of Money. The Call option is profitable when the Price increases, so the value of option also inreases when price increases.

Option A is correct.

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