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If a corporationâ€™s stock price experiences increased volatility, what would happen to the value of the call options and the put options on the corporationâ€™s stock?

The call options would increase in value, and the put options would decrease in value.
The call options would decrease in value, and the put options would increase in value.
Both the call options and the put options would decrease in value.
Both the call options and the put options would increase in value.

Correct - Your answer is correct.

Wrong - Your answer is wrong.

Detailed Answer

Answer (D) is correct. Since options protect against volatility in the stock price, the more volatile a stock is, the more owning the options becomes valuable.

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