Chapter 06 · Section 6.1

Impact of Volatility-2

If for example, volatility changes from 18% to 23%, the current profit/loss profile will move up to the 23% volatility line. The sale of this call will provide more profit to its holder as the option will have a higher probability of being in the money.

All things held constant except for the level of volatility you can easily see the increase in the possible profit for the call holder.

Underlying Stock Price at $131.50

Profit per share from:
23% Volatility $ 9.00
18% Volatility $ 4.75