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Derivatives and Risk Management, 1st Edition
book

Derivatives and Risk Management, 1st Edition

by Sundaram Janakiramanan
May 2024
Intermediate to advanced content levelIntermediate to advanced
542 pages
27h 26m
English
Pearson India
Content preview from Derivatives and Risk Management, 1st Edition
Combinations of Options: Trading Strategies 325
A written straddle is appropriate if no signicant movement is expected in the stock price, as it would
lead to prots.
13.4.2 Strips
Straddles are used when the probability of an increase in price is similar to the probability of a decrease
in the price. Strips are used when the probability of an increase in price is smaller than the probability of
a decrease in the price. Since an investor would be interested in buying a call if they expect the stock price
to increase and since they would be interested in buying a put if they expect the stock price to decrease, a
strip strategy implies that the ...
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Publisher Resources

ISBN: 9781299447547Publisher Website