An American Put Option Is Sometimes Exercised Early Because

question 20

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:

Achondroplasia

A genetic disorder characterized by dwarfism, specifically affecting bone growth and resulting in disproportionately short limbs.

Homozygous

Having two identical alleles at the same locus on homologous chromosomes.

Phenylketonuria (PKU)

A genetic disorder characterized by the inability to metabolize the amino acid phenylalanine, leading to brain and developmental issues if untreated.

Diet Low

Referring to a nutritional plan that reduces or limits the intake of a specific component, such as fat, carbohydrates, or calories.