sgupta0827

Two things

1. Call and put prices USUALLY increase as volatility increases.

2. According to put call parity:

P = C + X/(1 + RRF) ^T - S

From the PCP equation, if there is an increase in T, the value of the put option will actually fall.

So there are two things to note here. If volatility is relatively high, then a greater time to expiration will allow the put holder more of a chance to benefit (as there is a greater chance of prices being lower than the strike price at expiration).

However, if volatility is relatively low, an increase in the time to expiration COULD result in a DECREASE in the value of a put option. (See PCP equation above).

Think that sorts it out.