An American Put Option Is Sometimes Exercised Early Because

question 17

Multiple Choice

An American put option is sometimes exercised early because:

• A)The holder of an in-the-money option believes that the stock has bottomed out and expects the stock to rise in the future.
• B)The absolute time value of the option is larger than the insurance value.
• C)The volatility of the stock has just increased.
• D)The skewness of the stock has just increased from its initial level.

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Definitions:

Intrusive Thoughts

Unwelcome, often distressing, thoughts or images that suddenly appear in a person's mind without the intention to think them.

Repetitive Behaviors

Actions performed repeatedly in a similar manner, often observed in various psychological disorders but also in everyday activities and rituals.

Anxiety Disorders

A category of mental health disorders characterized by significant fear or anxiety that impacts a person's daily functioning.

Excessive Fear

An overwhelming and often irrational sense of anxiety or dread regarding a specific object, situation, or activity, beyond normal or expected levels.