Which of the following will NOT increase the value of a put option?
A)An increase in the time to maturity
B)A decrease in the stock price
C)A decrease in the stock's volatility
D)An increase in the exercise price

Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell the underlying asset at a specified price (exercise price) before the expiration date. The value of a put option increases when the stock price decreases, the time to maturity increases, and the exercise price increases. However, a decrease in the stock's volatility reduces the likelihood of large price movements, which reduces the value of the put option. Therefore, choice C will NOT increase the value of a put option.

Which of the Following Will NOT Increase the Value of a Put