8. The five factors affecting prices of call and put options Both call and put options are affected by the following five factors: the exercise price, the underlying stock price, the time to expiration, the stock's standard deviation, and the risk-free rate. However, the direction of the effects on call and put options could be different. Use the following table to identify whether each statement describes put options or call options: Statement Put Option Call Option 1. Option prices are higher when the stock price is lower. 2. Option prices increase if the stock price increases. 3. When the risk-free rate increases, option prices decline. 4. As the risk-free rate decreases, the value of the option decreases