Assume that you own both a June 20 put and a June 20 call on ALPO stock. Which one of the following statements is correct concerning your option positions? Ignore taxes and transaction costs.

Multiple Choice

• Both a June 20 put and a June 20 call on ALPO will have higher values than your June 20 options.

• An increase in the stock price will increase the value of your put and decrease the value of your call.

• A decrease in the stock price will decrease the value of both of your options.

• If put-call parity does not hold you can profit from your positions even if ALPO stock sells for $20 a share.

• The time premium on your June 20 put is equal to the time premium on a July 20 put on ALPO.