SIE practice questionmediumOption premiums
If a put premium rises while the underlying stock remains flat, what is the most likely reason?
- ARising volatility expectations✓ Correct answer
- BStock dividend declared
- CInterest rates fell
- DFalling time to expiration
Explanation
Why A — Rising volatility expectations
Higher volatility increases option premiums. Stock dividends and time decay would generally not produce this effect if price is flat.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Options questions
- A trader wants to monitor the impact of time decay on an option’s price. Which Greek should they focus on?
- If an investor is assigned on a short call, what must they do?
- If ABC is trading at $56 and the ABC 55 call is trading at $2.50, what is the intrinsic value?
- Upon expiration, which options are automatically exercised by OCC?
- An investor sells an uncovered (naked) put. What is the maximum potential loss?
- With a long put option with a $50 strike and a $3 premium, the breakeven point is:
- A DEF Jul 60 put is trading for $3. DEF stock is currently $55. What is the intrinsic value of the put?
- An investor establishes a bull call spread by buying a DEF 50 call for $6 and selling a DEF 60 call for $2. What is the…