Question

Which of the following statements is correct concerning options? Group of answer choices In order for...

Which of the following statements is correct concerning options?

Group of answer choices

In order for an option to have value, there should be very little price movement in the underlying asset.

The shorter the maturity, the greater the value in the option.

The higher the strike price, the greater the value for a put.

The higher the strike price, the greater the value for a call.

The lower the underlying value in the asset, the greater the value of the option.

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Homework Answers

Answer #1

The correct statement is:

The higher the strike price, the greater the value for a put.

Call option is the right to buy at strile price while put option is the right to sell at the strike price

Hence, the value of call option decreases with an increase in strike price and value of put rises

Higher the price movement, higher will the value of option

Longer the maturity, greater the value

Higher the value of underlying asset, higher will be the value of the option

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