A put option premium has a lower bound that is equal to the greater of zero and the difference between the underlying ____ prices. The upper bound of a call option premium is the ____ price.
A) spot and exercise; exercise
B) spot and exercise; spot
C) exercise and spot; exercise
D) exercise and spot; spot

Question

Quizplus · Accepted Answer

The lower bound of a put option is the greater of zero and the difference between the exercise and spot prices. The upper bound of a call option is the spot price.

A Put Option Premium Has a Lower Bound That Is