All else equal,if the volatility (variance)of the underlying stock increases,then the:
A)value of a put option increases and that of a call option decrease.
B)value of a put option decreases and that of a call option increase.
C)value of both a put option and a call option increase.
D)value of both a put option and a call option decrease.

Question

Quizplus · Accepted Answer

Higher volatility increases the potential for larger price movements, which benefits both call and put options as they have more opportunity to end up in-the-money.

All Else Equal,if the Volatility (Variance)of the Underlying Stock Increases,then