Considering a put option, an increase in the strike price:
A) causes the intrinsic value of the option to decrease if it is above zero.
B) causes the intrinsic value of the option to increase if it is above zero.
C) causes the value of the option to decrease.
D) makes the option worthless.

Question

Quizplus · Accepted Answer

An increase in the strike price of a put option (which gives the holder the right to sell a security at a specified price) increases its intrinsic value if it is already in the money (above zero), because the option becomes more valuable as the difference between the market price and the higher strike price increases.

Considering a Put Option, an Increase in the Strike Price