FMP-Options

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FMP-Options

Postby anbu.edu » Tue Oct 08, 2013 1:42 am

An option portfolio exhibits high unfavorable sensitivity to increases in implied volatility and while experiencing significant daily losses with the passage of time. Which strategy would the trader most likely employ to hedge his portfolio?
Choose one answer.
Choose one answer.
a. Sell short-dated options and buy long-dated options Correct
b. Buy short-dated options and sell long-dated options Incorrect
c. Sell short-dated options and sell long-dated options Incorrect
d. Buy short-dated options and buy long-dated options Incorrect

unfavorable sensitivity to increases in implied volatility and while experiencing significant daily losses with the passage of time- which means we have to reverse callender spread right?

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