If the volatility of the underlying asset decreases, then the:
A) value of the put option will increase, but the value of the call option will decrease.
B) value of the put option will decrease, but the value of the call option will increase.
C) value of both the put and call option will increase.
D) value of both the put and call option will decrease.
E) value of both the put and call option will remain the same.

Question

Quizplus · Accepted Answer

The value of both put and call options generally decreases with a decrease in the volatility of the underlying asset because lower volatility means less chance of the option ending in the money.

If the Volatility of the Underlying Asset Decreases, Then The