How Put Option decreases Duration

CFA Level III
#1

Could anyone explain how put option decreases duration when interest rate increases? I have looked at other threads which discusses same issue but it doesn’t provide any explanation.

#2

What happens to the value of a put option (on a bond) when interest rates increase?

#3

Put option becomes more valuable .

#4

If the price increases when interest rates increase, does it have positive (effective) duration or negative (effective) duration?

#5

Negative Duration

#6

So . . . if you add a security with a negative duration to an existing portfolio (with a positive duration), what will it do to the portfolio’s duration?

#7

Decrease. Thank you

#8

My pleasure.

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