Investor A bought a call option and Investor B bought a put option. All else equal if the underlying share price volatility increases the value of Investor A's position will ________ and the value of Investor B's position will ________.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease

Question

Quizplus · Accepted Answer

Both call and put options increase in value with higher volatility, as it raises the potential for larger price movements, benefiting both investors.

Investor a Bought a Call Option and Investor B Bought