Investor A bought a call option, and investor B bought a put option. All else eq

Question

Investor A bought a call option, and investor B bought a put option. All else equal, if the interest rate increases, the value of investor A's position will ______ and the value of investor B's position will _______.

The answer is "increase; decrease"

Can anyone tell me why?

The other similar question is

Investor A bought a call option that expires in 6 months. Investor B wrote a put option with a 9-month maturity. All else equal, as the time to expiration approaches, the value of investor A's position will _______ and the value of investor B's position will _______.

decrease; increase

Can I know why???

Explanation / Answer

Solution:

Call options - high interest rate - high intrinsic value - call option value increases

Put options - high interest rate - low intrinsic value - put option value decreases

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