FREE Trial

If the premium on a call option has recently declined, does this decline indicate that the option

Question:

If the premium on a call option has recently declined, does this decline indicate that the option is a better buy than it was previously? Why?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 88% (9 reviews)

A decline in a call options premium does not necessarily mean that it is now more ...View the full answer


answer-question-section
Answered By
tutor-profile-image
JAPHETH KOGEI
Hi there. I'm here to assist you to score the highest marks on your assignments and homework. My areas of specialisation are: Auditing, Financial Accounting, Macroeconomics, Monetary-economics, Business-administration, Advanced-accounting, Corporate Finance, Professional-accounting-ethics, Corporate governance, Financial-risk-analysis, Financial-budgeting, Corporate-social-responsibility, Statistics, Business management, logic, Critical thinking, So, I look forward to helping you solve your academic problem. I enjoy teaching and tutoring university and high school students. During my free time, I also read books on motivation, leadership, comedy, emotional intelligence, critical thinking, nature, human nature, innovation, persuasion, performance, negotiations, goals, power, time management, wealth, debates, sales, and finance. Additionally, I am a panellist on an FM radio program on Sunday mornings where we discuss current affairs. I travel three times a year either to the USA, Europe and around Africa. As a university student in the USA, I enjoyed interacting with people from different cultures and ethnic groups. Together with friends, we travelled widely in the USA and in Europe (UK, France, Denmark, Germany, Turkey, etc). So, I look forward to tutoring you. I believe that it will be exciting to meet them.
3.00+ 2+ Reviews 10+ Question Solved
Related Book For  book-img-for-question
Fundamentals of Investments

Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

See More Books
Question Posted:
See More Questions

Related Video

A call option is a type of financial contract that gives the holder the right, but not the obligation, to buy an underlying asset (such as a stock, commodity, or currency) at a specified price (called the strike price) within a specified period of time. When an investor purchases a call option, they are essentially betting that the price of the underlying asset will rise above the strike price before the option\'s expiration date. If the price of the asset does rise above the strike price, the investor can exercise the option by buying the asset at the strike price and then selling it at the higher market price, thereby earning a profit. Call options are often used as a speculative investment strategy, as they allow investors to potentially profit from the upward movement of an asset without having to actually own the asset itself. They are also commonly used as a hedging tool to protect against potential losses in a portfolio.

Students also viewed these Accounting questions

The Dark Tides - ISBN: 1491749407 - Free Book