How is estimate of volatility or the implied volatility used
How is estimate of volatility or the implied volatility used?
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When you hedge options you have to select whether to utilize a delta based on your own estimate of volatility or the implied volatility. If you need to ignore fluctuations in your mark-to-market P and L you will hedge by using the implied volatility, even if you may believe this volatility to be incorrect.
How is risk defined in mathematical terms?
When is the close relationship breaks-down in hedging reasons?
How is hedging requirement decreased by a gamma-neutral strategy?
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What is forward equation?
State the term dispersion trading?
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