The elasticity of a stock call option is always
A) greater than one.
B) smaller than one.
C) negative.
D) infinite.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The elasticity of a stock call option is always greater than one because the percentage change in the option price relative to the percentage change in the underlying stock price is amplified due to the leverage effect of options. This means that for a given percentage increase in the stock price, the call option's price increases by a greater percentage, making its elasticity greater than one.

The Elasticity of a Stock Call Option Is Always