Briefly Explain How an Option Holder Gains from the Volatility

question 37

Essay

Briefly explain how an option holder gains from the volatility of the underlying stock price.

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Definitions:

Fallopian Tubes

A pair of tubes along which eggs travel from the ovaries to the uterus in the female reproductive system.

Cyst

A closed sac-like structure that can be filled with fluid, pus, or other material, occurring anywhere in the body.

Bulbourethral Gland

One of the two small glands found in the male reproductive system responsible for secreting a clear fluid that lubricates the urethra and neutralizes acidity.

Oocyte

A female germ cell involved in reproduction; essentially an immature egg cell.