If We Define the "Premium" on an Option to Be

question 12

True/False

If we define the "premium" on an option to be the difference between the price at which an option sells and the exercise value (or the difference between the stock's current market price and the strike price), then we would expect the premium to increase as the stock price increases, other things held constant.

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Definitions:

Short Equity

typically refers to a short-selling strategy in the stock market where investors sell shares they do not own, betting the stock's price will decline.

Negative

is generally used to describe something harmful, undesirable, or lacking in positive qualities.

Brand Manager

A professional responsible for developing and maintaining a brand's image, strategies, and promotional activities.

Turning Point

A moment or event that marks a significant change or stage in a process, often leading to a new and different direction.