upside effect of volatility only

MeteorShower

The upside effect of volatility hurts:

I. calls. II. puts.

A. I only.
B. II only.
C. both I and II.
D. none of them.

I got tricked again...

Bluetick1010

girl you gonna think, girl you think, girl you think I invented dividends, interest, volatility, underlying price,time to expiration, strike price.

Benjiko

I assume they are viewing from the holder of the option. If so that makes sense.

Mechanic

I think volatality can only help options and can never hurt options. The biggest loss is that options become worthless. So answer is D.

farrukhsadiq

D'Artagnan Wrote:
-------------------------------------------------------
> The upside effect of volatility hurts:
>
> I. calls. II. puts.
>
> A. I only.
> B. II only.
> C. both I and II.
> D. none of them.
>
> I got tricked again...


I'm not sure where you got this question. It looks like a FINRA licensing question.
Volatility hurts the writer of a covered call because they are betting the price will not move and are hoping to pocket the premium.
If you are the holder of the call you are buying them as a play on volatility upside volatility will help you. You could find yourself in the money.
Upside volatility will hurt the holder of a put, but again will benefit the seller.

What's the answer?

kmf229

Puts only right?

UP&Down volitility helps both. If you take out the Good volitility for a put (The downside) you're left with the bad.