As I understand, the larger the price fluctuations (volatility), the riskier the option and the more expensive the options price. Why is this so? Makes no sense to me because it would seem that the more volatile an option, the less likely the option will be in the money at expiration.
Furthermore, why is the DIRECTION in which an options price fluctuates irrelevant? This is what I've read and this makes no sense either because if I owned a call option for example, the DIRECTION the underlying stock moves sure as heck IS relevant.
Can someone please clarify?
Furthermore, why is the DIRECTION in which an options price fluctuates irrelevant? This is what I've read and this makes no sense either because if I owned a call option for example, the DIRECTION the underlying stock moves sure as heck IS relevant.
Can someone please clarify?
