Other things equal, the price of a stock call option is positively correlated with which of the following factors? a. the stock price.
b. the stock volatility
c. the exercise price.
d. the time to expiration.
e. cannot be determined.

a. the stock price.

b. the stock volatility

d. the time to expiration.

Explanation:

The price of the Call Option is positively correlated with the price of the underlying stock because a Call option gives the holder the right to buy a stock at a certain price so if the underlying stock increases in value, the call option will increase in value as well as it means that the holder might be able to buy the stock at a lower price.

Volatility also moves in the same direction as the call option price because a high volatility means there is a chance that the stock will increase past the exercise price.

Time to maturity for non-European call options is also directly related to call option price because it means that there will be more time for the stock to change in value potentially for the better thereby increasing the call option returns.

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

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