Chapter 03 · Section 3.1

Volatility increase

If the volatility of the underlying asset increases:

a) the higher the put premium;
b) the higher the call premium;
c) the lower the put premium;
d) the lower the call premium.
• e) a and b
  Yes. if the price of the underlying asset starts to fluctuate more heavily, the risk for the option writer increases. Continue
  f) a and d

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