Which of the Following Statements Best Describes the Nature of Option

question 22

Multiple Choice

Which of the following statements best describes the nature of option time value decay?

• A) time value decays more rapidly as the stock price approaches being at-the-money
• B) time value decays more rapidly as expiration approaches
• C) time value decays more rapidly for put option than call options
• D) time value decay does not occur for collar option strategies
• E) time value decay is detrimental for a trader who is short call options

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Definitions:

Plausible

Appearing reasonable or probable, often used in the context of arguments or hypotheses that seem likely to be true.

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Extremely strange or unusual in a way that might be puzzling or difficult to understand.

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A condition characterized by difficulty seeing in low light or darkness, due to impaired function of specific visual cells.