How Does High Volatility Impact Call Option Premiums?

High volatility significantly increases call option premiums. Volatility measures the potential magnitude of a cryptocurrency's price swings.

When volatility is high, there is a greater statistical probability that the crypto's price will experience a large upward move and rise far above the call option's strike price before expiration. This increased likelihood of the option becoming deeply profitable makes it more valuable to a buyer and riskier for a seller.

Consequently, the seller demands a higher premium to compensate for this increased risk.