
Explanation:
True. A chooser option gives the holder the right, at the chooser date, to select whichever plain-vanilla option is more valuable: the call or the put.
Because the holder can always choose the better of the two alternatives, the chooser must be worth at least as much as either standalone option with the same strike and maturity. In practice, it is typically worth more than either one individually.
Q-14.1. True or false: a plain vanilla European-style (simple) chooser must be worth more than either counterpart call or put (the call or put with same strike and maturity but without a chooser date).
A
True
B
False
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