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I believe the simplest way to understand this intuitively is to look at the case of the forward contract instead of an option. If the drift of the stock is higher should not the forward be higher ? No of course because the forward can be statically replicated with a stock and a bond. Therefore the forward contract will grow at the risk free rate with its expiry date and not the stock drift.

Note that repo and dividend impact the forward though because those are actual cash flows which cannot be just replicated at inception so they impact the forward rate.

I believe the simplest way to understand this intuitively is to look at the case of the forward contract instead of an option. If the drift of the stock is higher should not the forward be higher ? No of course because the forward can be statically replicated with a stock and a bond. Therefore the forward contract will grow at the risk free rate and not the drift.

Note that repo and dividend impact the forward though because those are actual cash flows which cannot be just replicated at inception so they impact the forward rate.

I believe the simplest way to understand this intuitively is to look at the case of the forward contract instead of an option. If the drift of the stock is higher should not the forward be higher ? No of course because the forward can be statically replicated with a stock and a bond. Therefore the forward contract will grow at the risk free rate with its expiry date and not the stock drift.

Note that repo and dividend impact the forward though because those are actual cash flows which cannot be just replicated at inception so they impact the forward rate.

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source | link

I believe the simplest way to understand this intuitively is to look at the case of the forward contract instead of an option. If the drift of the stock is higher should not the forward be higher ? No of course because the forward can be statically replicated with a stock and a bond. Therefore the forward contract will grow at the risk free rate and not the drift.

Note that repo and dividend impact the forward though because those are actual cash flows which cannot be just replicated at inception so they impact the forward rate.