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January 15, 2016 at 2:01 pm
@ Sir John Moffat,
Sir I was doing ‘Q59 UNIGLOW from Kaplan kit sep14 to aug15 edition’ on option pricing.
It is not difficult question but I just need to understand one point.
In answer it says we can use Delta to construct delta hedge and in order to protect against a fall in Uniglow’s share price, the easiest hegde would be to write (sell) options on Uniglow’s shares. (I am protecting the investment of my company in Uniglow’s shares).
So my question whether the option we sell is call or put option?
John Moffat says
January 15, 2016 at 3:56 pm
We sell a call option (you could achieve the same ‘protection’ by buying a put option, but in the exam you always sell a call to create a delta hedge, unless told otherwise).
I do explain the reasoning behind this in the lectures.
January 16, 2016 at 11:04 am
Thank you very much sir.
January 16, 2016 at 3:06 pm
You are welcome 🙂
November 26, 2015 at 9:43 am
thank you. incredible lecture
November 26, 2015 at 11:37 am
Thank you for the comment 🙂
November 14, 2015 at 8:37 am
i still can’t figure out how you reached the figure of 0.045 while calculating d1 (0.1+0.5*0.4^2)0.25 . My answer is 0.105 i’m really confused please help..
November 14, 2015 at 8:39 am
(0.1 + 0.5 x 0.4 x 0.4) x 0.25 = (0.1 + 0.08) x 0.25 = 0.18 x 0.25 = 0.045
November 14, 2015 at 8:49 am
thank you so much looks like my calculator had issues
November 14, 2015 at 8:58 am
May 26, 2015 at 3:26 pm
on example 5 why is the put option more epensive than call option?
May 26, 2015 at 5:44 pm
Because that is was comes out of the equations!!!!
The price of the share in 3 months could obviously be anything. However it is more likely that it will be less than 1.80 than more than 1.80, so the people selling the options will want to charge more for a put option because they are more likely to have to pay out on it.
(and don’t ask me why the price is more likely to be less than 1.80 than more!! That is down to the statistics why is how the derived the formulae, and I have certainly no intention of going through their proof 🙂 )
May 19, 2015 at 8:26 pm
am unable to calculator the figure for e.
I have a scientific one with e and ln.
which key to press for +-
May 19, 2015 at 8:56 pm
Not all scientific calculators are the same – there are two different ways that they work. If yours does not have a +/- button then it uses a different logic, and you will have to look in the instruction book how to do it.
April 13, 2015 at 8:03 am
In Example % while calculating value of call option on the third step u used e raised to power -.04… aint that wrong as time is .25 and r is .1 when we multiply that it comes to .025.. :O
dont know how u came to to .04 :O
waiting for ur reply
April 13, 2015 at 8:04 am
April 13, 2015 at 10:31 am
You are correct – it should be 0.025 (and the final answer should be 4c).
I will re-record the lecture.
April 13, 2015 at 12:47 pm
May 25, 2015 at 5:19 pm
Please leave it like it is, makes us think, not just silly writing all down 🙂
May 25, 2015 at 5:24 pm
Good point Braske77 (and thank you 🙂 )
February 24, 2015 at 3:49 pm
Im gettign lost in example 5 on the calculation of p on the e to the power of -0.04 what is the e value is it 2.7183
February 24, 2015 at 4:05 pm
Yes it is – and you must have a calculator with an ‘e’ button on it 🙂
March 14, 2015 at 6:58 pm
found the e button thanx
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