Question

When the exercise price goes up, the price of the call option on the stock will...

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

Homework Answers

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.

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