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if there are prospects that the future share price of an investment wld fall, is it advisable to get a pull or call otion…pls xplain
Thank you , I’m going back to the lecture.
I love your lectures, really very well explained, so thank you very much.
I have a question in relation to Delta Hedge, it assumes that only current MV of share changes, but N(d1) is constant. How could it be when we use Current MV of shares in calculations of N(d1), so it should change as well.
@cara, That is very true, which is why delta hedges need to keep being changed (and this is stated in the lecture).
That is the reason for all the other Greeks, but you are only expected to know what they measure and you are not expected to be able to calculations with them.
Sir..kindly let me know how he is going to gani by selling call option???if share price is falling…value of call option also falling…..he would have purchased call option at higher price….and by selling it at lower price it wont be loss???
@syedwaqar, You sell it first (at the higher price) and buy back later (at the lower price)
Thank you .There is no way i would have learnt the delta hedge if i had not watched the video here
Question 3 in the Dec 2010 P4 examination paper is a good question on options.
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