Implied volatility has what kind of relationship to the value of a stock option price? Negative...
Implied volatility has what kind of relationship to the value of a stock option price?
Negative
Uncorrelated
Depends on if you are buying a put or call
Positive
Homework Answers
Answer: positive
There is a positive correlation.
It directly influences the option premium, which reacts on option price. If an expectation decreases in the market, demand for stock would decrease and it decreases implied volatility and option price both; the reverse thing would happen if there is an increase in expectation in the market.
Since both these variables move in the same direction, it establishes a positive relationship.
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Implied volatility has what kind of relationship to the value of
a stock option price?
Negative...
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