--%>

What is Static Hedging

What is Static Hedging?

E

Expert

Verified

Static hedging: There are rather a few problems with delta hedging, on the practical and the theoretical both side. In practice, hedging should be done at discrete times and is expensive. Sometimes one has to sell or buy a prohibitively huge number of the underlying in order to follow that theory. This is a problem along with barrier options and options with discontinuous payoff.

   Related Questions in Financial Management

  • Q : International monetary system how does

    how does adquate liquidity ensures a good international monetary sustem

  • Q : International finance factor

    factor responsible for surging the international investment portfolio

  • Q : Estimate the changes in the margin

    Suppose current settlement price on a CME DM futures contract is $0.6080/DM. You contain a long position in futures contract. Presently your margin account contain a balance of $1,700. The next three days' settlement prices are $0.6066, $0.6073, & $0.598

  • Q : Illustrates an example of probability

    Illustrates an example of probability of coin willing to bet?

  • Q : Illustrates an example of dispersion

    Illustrates an example of dispersion trading?

  • Q : Usefulness of inspecting countrys

    Why would it be useful to inspect a country's balance of payments data?It would be useful to inspect a country's BOP for at least two reasons. Firstly, BOP provides detailed information regarding the supply & demand of the country's currency

  • Q : Describe the concept of the Sharpe

    Describe the concept of the Sharpe performance measure.The Sharpe performance measure (SHP) is a risk-adjusted performance measure. This is describing as the mean excess return to portfolio above the risk-free rate divided by the portfolio's sta

  • Q : Effect of free international trade in

    How is a country's economic well-being increased through free international trade in goods & services?According to David Ricardo, along with free international trade, this is mutually beneficial for two countries to each specialize in the pr

  • Q : How was a Monte Carlo simulation in

    How was a Monte Carlo simulation in finance assured?

  • Q : Explain concept of company debt

    Who introduced the concept of company’s debt associated to the strike price and the maturity of the debt?