All other things held constant,premiums on both put and call options will increase when the
A) exercise price increases.
B) volatility of the underlying asset increases.
C) term to maturity decreases.
D) futures price increases.

Question

Quizplus · Accepted Answer

Volatility is a measure of uncertainty or risk associated with the underlying asset. Higher volatility implies a greater chance of the asset's price moving significantly in either direction, increasing the likelihood of an options contract being exercised. This heightened risk leads to higher premiums on both put and call options.

All Other Things Held Constant,premiums on Both Put and Call