Stocks that have more volatile price changes have more valuable call options because call holders:
A) capture upside potential without downside risk.
B) realize that volatility decreases the present value of the exercise price.
C) have too little variability in the exercise price.
D)have transferred all risk to put holders.

Question

Quizplus · Accepted Answer

Call holders benefit from volatile price changes because they can capture the upside potential of the stock without bearing the downside risk. As a result, options on more volatile stocks have higher prices and are more valuable.

Stocks That Have More Volatile Price Changes Have More Valuable