Question

Which of the following statement is FALSE?

		When the strike price increases while all else remaining the same, puts increase in value while calls decrease in value.
		When dividends decrease with all else remaining the same, calls increase in value while puts decrease in value.
		When volatility decreases with all else remaining the same, both calls and puts increase in value.
		When the stock price increases with all else remaining the same, call increase in value while puts decrease in value.

Answer 1

Answer: The third option is false
This is because, the value of options increase with increase in volatility and decrease with decrease in volatility.

So, when volatility decreases with all else remaining the same, both calls and puts value should decrease in value and not increase