A stock is currently priced at $22 a share while the $26 put option is priced at $5.22. The put option delta is −.25. What is the approximate put price if the stock increases in value to $25?
A)$3.76
B)$4.47
C)$5.08
D)$5.27
E)$5.50

Question

Quizplus · Accepted Answer

The put option price decreases as the stock price increases. With a delta of -0.25, for every $1 increase in the stock price, the put option's price decreases by $0.25. The stock price increases from $22 to $25, a $3 increase. Thus, the put option price decreases by $0.25 * 3 = $0.75. The new put option price is $5.22 - $0.75 = $4.47.

A Stock Is Currently Priced at $22 a Share While