Answer the following theoretical questions in words based on our discussion during the lectures on option theory.

1. a) All else equal, which option shall have a higher premium? A longer dates option or a shorter

   dated option? Why ?

2. b) The premium of put option will increase or decrease as the strike prices do down ? Why?

3. c) The premium of call option will increase or decrease if the volatility of the underlying option

   goes down?

4. d) When would you want to sell a strangle as in what are you beliefs regarding the expiry price

   of the underlying?

5. e) When would you want to enter a long position in a butterfly spread as in what are you

   beliefs regarding the expiry price of the underlying?

6. f) Price of at the money options decease faster than out of money options near expiry, true or false?