A call option’s intrinsic value: A)
| decreases as the stock price increases above the strike price, while a put option’s intrinsic value increases as the stock price decreases below the strike price. |
| B)
| increases as the stock price increases above the strike price, while a put option’s intrinsic value increases as the stock price decreases below the strike price. |
| C)
| increases as the stock price increases above the strike price, while a put option’s intrinsic value decreases as the stock price decreases below the strike price. |
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For a call option, as the underlying stock price increases above the strike price, the option moves farther into the money, and the intrinsic value is increasing. For a put option, as the underlying stock price decreases below the strike price, the option moves farther into the money, and the intrinsic value is increasing. |