An option replication which is used to hedge a given portfolio involving the set up of another portfolio of approximately equal value on specific boundary. More specifically, it involves hedging an option with other options, in an attempt to construct a hedging portfolio that has a delta that moves in tandem with the delta of the option being hedged.
Derivatives
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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