NCFM Options Trading Strategies Practice Questions - NCFM Options Trading Strategies Module Exam

How does an increase in the volatility of the underlying asset affect the prices of call and put options?

It increases the values of both call and put options. It increases the call option value and decreases the put option value. It decreases the values of both call and put options. It has no direct effect on option pricing as volatility only impacts delta.

Correct Answer:

It increases the values of both call and put options.

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