Option traders often attempt to gain an edge by purchasing options on a stock they expect to be more volatile than what is implied in the price of its options. Higher volatility translates into higher option prices, so if the assessment of future volatility is correct, it will increase the chances of a profitable trade.

Is it possible to make money this way? Many academic studies tried to answer this question by focusing on stock index options and have concluded the answer is no. However, one recent academic study of options on individual stocks has drawn different conclusions.