For a given option portfolio, you are long vega (value increases as volatility goes up), and short theta (as time passes your options portfolio loses money). Are you net long or short options? Net long, because as volatility goes up and it increases in value and as time passes you lose value. Net short, because as volatility goes up and it decreases in value and as time passes you increase value. not consistent you are long one and short the other, so can't tell completely independent derivatives, its apples and oranges and no reflection on your portfolio

implied volatility The underlying asset's market price is referred to as "volatility." It measures…

Answered: For a given option portfolio, you are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For a given option portfolio, you are long vega (value increases as volatility goes up), and short theta (as time passes your options portfolio loses money). Are you net long or short options?

		Net long, because as volatility goes up and it increases in value and as time passes you lose value.
		Net short, because as volatility goes up and it decreases in value and as time passes you increase value.
		not consistent you are long one and short the other, so can't tell
		completely independent derivatives, its apples and oranges and no reflection on your portfolio

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