Question

The prices of put options are ( ) the higher the strike price, and the prices...

The prices of put options are ( ) the higher the strike price, and the prices of call options are ( )the higher is the strike price.

a. lower,higher

b. higher,lower

c.lower,lower

d.higher,higher

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Answer #1

A put option gives the holder the option to sell the underlying asset at the strike price. Therefore, a put option with a higher strike is more valuable.

A call option gives the holder the option to buy the underlying asset at the strike price. Therefore, a call option with a higher strike is less valuable.

Therefore, the answer is b. higher,lower

The prices of put options are (higher) the higher the strike price, and the prices of call options are (lower) the higher is the strike price.

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