Traders who believe volatilities will fall significantly in the near-term will:
A) sell futures now.
B) buy options now.
C) sell options now.
D) buy futures now.

Question

Quizplus · Accepted Answer

Selling options is the best choice as the trader who believes volatility will fall significantly wants to benefit from a decrease in options prices. Selling options now, while the volatility is still high, will allow the trader to obtain a higher premium for the options sold. Buying futures or options now would be costly and not in line with the trader's belief that volatility will decrease.

Traders Who Believe Volatilities Will Fall Significantly in the Near-Term