Tele-Tech Com Has Announced a Large Loss in Their On-Line

Multiple Choice

Tele-Tech Com has announced a large loss in their on-line services division causing the price of Tele-Tech Com stock to drop but the price volatility of the stock is not expected to drop. Which of the following correctly identifies the impact of these changes on the put option of Tele-Tech Com?

A) Both changes cause the price of the put option to decrease.
B) Both changes cause the price of the put option to increase.
C) The volatility normally will have a positive effect on the price of the put option, but the lower price of the stock will cause the price of the put option to increase.
D) The volatility normally will have a negative effect on the price of the put option while the lower price of the stock will cause the price of the put option to decrease.
E) Volatility has no direct effect on the price of the put option while the lower price of the stock will cause the price of the put option to decrease.