High volatility is bad for option holders because it increases the probability that the option will expire out-of-the-money.

Name: High volatility is bad for option holders because it increases the probability that the option will expire out-of-the-money.
Brand: Quizplus
Rating: 4.8 (39 reviews)

Question

Quizplus · Accepted Answer

High volatility can actually work in favor of option holders, as it can increase the potential for a large payoff. It does, however, also increase the risk of the option expiring worthless.

High Volatility Is Bad for Option Holders Because It Increases