Derivatives Q108

0. Analyst 1: A European put may be worthless the longer the time to expiration because the cost of waiting to receive the exercise price is higher.
Analyst 2: A European put may be worthless the longer the time to expiration because the longer time to expiration means that that the put is more likely to expire out-of-the-money.
Which analyst’s statement is most likely correct?

Answer
Comment
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Option : A
Explanation : Although the longer time benefits the holder of the option, it also has a cost in that exercise of a longer-term put comes much later. Therefore, the receipt of the exercise price is delayed.

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