The value of a call option is inversely related to:
A) Underlying stock price.
B) Time to expiration
C) Exercise price.
D) Choices a and b.
E) Choices b and c.

Question

Quizplus · Accepted Answer

The value of a call option increases as the exercise price decreases, indicating an inverse relationship. Choices A and B are incorrect because the value of a call option is directly related to the underlying stock price and can increase with time to expiration due to the potential for the underlying stock to move in a favorable direction.

The Value of a Call Option Is Inversely Related To