6. Factors that affect the value of options Aa Aa Understanding how different factors affect the value of options is the first step to understanding option pricing models. The following table shows...

Extracted text: 6. Factors that affect the value of options Aa Aa Understanding how different factors affect the value of options is the first step to understanding option pricing models. The following table shows how increases in the given factors on the left affect the value of a put option. For each factor, indicate whether an increase in its value causes the value of the put option to increase or to decrease. Causes the Value of the Put Option To Increases in this factor: Increase Decrease Underlying stock price Exercise price Time to expiration Volatility Which of the following best describes a naked option? When an investor sells call options without the stock to back them up When an investor writes call options against stock held in his or her portfolio