Which one of the following will increase the value of a put option?
A) A decrease in the exercise price
B) A decrease in time to expiration of the put
C) An increase in the volatility of the underlying stock
D) An increase in stock price

Question

Quizplus · Accepted Answer

An increase in the volatility of the underlying stock increases the value of a put option because it raises the potential for the stock price to move significantly, increasing the chance of the option being in-the-money.

Which One of the Following Will Increase the Value of a Put