Ch.11 Derivatives

State whether you agree or disagree with the following statement. Explain why. You. expect. volatility. of a stocks. returns .to .double. in the. near future. but you. are not sure if the stock. will go. up or down .in value. The. market. consensus. is that the volatility. will remain. the same. If you want. to speculate. on your expectation., you should consider buying. (as opposed to selling) both call and put options on this stock (as opposed to only calls or only puts) before the anticipated increase in volatility.

(Note: You are only considering call and put positions on this stock. You are not considering other ways to profit from your expectation, such as buying or short selling the stock itself.)