When the following value of the underlying asset increases, it would unambiguously increase the value of an American put option.

Question

Quizplus · Accepted Answer

The value of an American put option is primarily determined by the difference between the strike price and the current price of the underlying asset. If the value of the underlying asset increases, it makes it less likely that the option will be exercised (since the option gives the right to sell at the strike price, which becomes less attractive as the market price increases), thus potentially decreasing the value of the put option.

When the Following Value of the Underlying Asset Increases, It