Hi guys
Can someone please clarify the difference between a barrier options and a gap option exactly? A gap is an option that gets exercised at 1 strike but its payoff is based on another strike. This sounds very similar to a barrier option which becomes activated on 1 barrier but its payoff...
Posting this here. About long and short hedges. https://forum.bionicturtle.com/threads/p1-t3-710-long-and-short-hedges-hull-chapter-3.10546/#post-77932
As per this thread short hedge means long basis which means that if the basis strengthens we gain. I.e. the logic is that b/c i go long the...
Hi guys,
I wanted to ask if I can skip the Hull eoc questions altogether and just do the bionic turtle ones? I am not sure there's enough of time to do everything along with the mock exams. What do you guys recommend. Is this advisable?
Didn't see a thread link for this q on the notes and couldn't find one so starting a thread on Q1 in question set for Bodie.
The answer for this in terms of expected return is 15%. The explanation is b/c "According to the equation for the return on the stock, the actually expected return on...
H guys,
Does anyone know why for variance swaps we can hedge them with options but for volatility we cannot hedge them with options? I understand delta hedging versus static replication so I don't need an explanation of that. Vol swaps expose you to sheer volatility of the asset rather than its...
Hi guys,
My question is why does duration go down for lower coupon bonds. I have read many many threads on this already on the internet and bionic turtle. The reason I still post this question is b/c I understand the question from the macaulay's duration point of view which is that you get...
Hi guys,
Why would I short future if my stocks outperform to lock in the profit? I don't quite understand this concept. Doesnt short futures act as a hedge to mitigate against stock price decreases? how does it lock in the profits of stock prices going up? I don't quite get this.
I tried...
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