Question

When the exercise price goes up, the price of the call option on the stock will ______; and the price of the put option on the stock will ________.

A) go up; go down

B) go up; go up

C) go down; go down

D) go down; go up

Answer 1

When strike price go up, as difference between spot price and strike price decreases and a call option might even move to out-the money, so price of the call will go down.

Similarly when strike price go up, as difference between spot price and strike price decreases and a put option might even move deep in-the money, so price of the put will go up.

When the exercise price goes up, the price of the call option on the stock will go down; and the price of the put option on the stock will go up.

Option D is correct.