101 Concepts for the Level I Exam
Concept 93: Factors that Determine the Value of an Option
Increase in |
Value of call option will |
Value of put option will |
value of the underlying |
Increase |
Decrease |
exercise price |
Decrease |
Increase |
risk-free rate |
Increase |
Decrease |
time to expiration |
Increase |
Increase (exception: a few European puts) |
volatility of the underlying |
Increase |
Increase |
costs incurred while holding the underlying |
Increase |
Decrease |
benefits received while holding the underlying |
Decrease |
Increase |
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