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.
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