Question

If the volatility of the underlying asset increases, then the: Value of the put option will...

If the volatility of the underlying asset increases, then the:

Value of the put option will increase, but the value of the call option will decrease.

Value of the put option will decrease, but the value of the call option will increase.

Value of both the put and call options will increase.

Value of both the put and call options will decrease.

Value of both the put and call options will remain the same.
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Answer #1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

The premium increases depending upon the call option/put option:

For a Call option, there is an increase in premium with an increase in:

1. Underlying asset price.

2. Time to Expiration

3. Volatility of the Underlying.

For a Put option, there is an increase in premium with an increase in:

1. Stike price

2. Time to Expiration.

3. Volatility of the Underlying.

Answer: Value of both the put and call options will increase.

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