How would you resolve the given apparent paradox

Reference no: EM13926029

1. Critique the following statement, made by an options investor: "My call option is very deep- in-the-money. I don't see how it can go any higher. I think I should exercise it."

2. Call prices are directly related to the stock's volatility, yet higher volatility means that the stock price can go lower. How would you resolve this apparent paradox?

Reference no: EM13926029

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