When the Volatility of an Option Increases from 30% to 32

question 11

Multiple Choice

When the volatility of an option increases from 30% to 32% the value of the option increases from $2.00 to $2.40. What is the vega of the option

• A) 0.20 dollars per %
• B) 0.50 dollars per %
• C) 0.80 dollars per %
• D) 2.00 dollars per %

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Definitions:

Stock Split

An action by a company to divide its existing shares into multiple new shares to boost the liquidity of the shares.

EPS Rise

An increase in a company's earnings per share (EPS), indicating that it is generating greater profits relative to the number of shares outstanding.

EPS Fall

A decrease in Earnings Per Share, indicating that a company is generating less profit for each share of its stock.

Stock Dividend

A stock dividend is a dividend payment made in the form of additional shares rather than a cash payout.