Hello guys, In Q48, we have a table with different strikes and different levels of implied volatility. I do not understand anything about this table and the reasoning behind. Could someone help me, it would be greatly appreciated?
option value is directly correlated with volatility, meaning the price of an option increases as volatility increases (it makes sense, of course an option is more likely to be in-the-money when volatility of the underlying is high)
use this fact and then apply it to hedging strategies using options.