The value of both call and put options increase as the variability of the stock price increases.

Name: The value of both call and put options increase as the variability of the stock price increases.
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Question

Quizplus · Accepted Answer

This is because higher variability (or volatility) in the stock price makes it more likely that the stock price will move beyond the strike price, increasing the chance of the option being exercised and thus increasing its value.

The Value of Both Call and Put Options Increase as the Variability