Since investors tend to dislike risk and like certainty, the more volatile a stock, the less valuable will be an option to purchase the stock, other things held constant.

Question

Quizplus · Accepted Answer

Options can become more valuable with increased volatility because the potential for the stock to make large moves increases the chances of the option being in the money at expiration.

Since Investors Tend to Dislike Risk and Like Certainty, the More