You have a portfolio with long positions in both puts and calls. The volatility in the market rises.

Question

Quizplus · Accepted Answer

When market volatility rises, both puts and calls generally increase in value because the potential for large price swings makes these options more valuable. This is due to the fact that options are priced based on volatility among other factors; higher volatility increases the likelihood of an option ending in the money.

You Have a Portfolio with Long Positions in Both Puts