Chapter 06 · Section 6.1

Increase in volatility

An increase in volatility will:

a) decrease the value of your put and increase your return.
b) have no effect on the value of your put.
c) increase the value of your put and increase your return.
• d) increase the value of your put and decrease your return.
  Yes. The value of a put will increase as volatility increases. As the option writer, the higher price you will be forced to pay in order to buy back the option at a later date will decrease your return. Continue
  e) decrease the value of your put and decrease your return.