Explain why an option is like an insurance contract. How is it different from a futures contract?

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Explain why an option is like an insurance contract. How is it different from a futures contract? Can an option, like a future, be used for hedging?

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Derivatives Principles And Practice

ISBN: 9780078034732

2nd Edition

Authors: Rangarajan Sundaram

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Question Posted: Jan 10, 2024 01:00 AM

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Explain why an option is like an insurance contract. How is it different from a futures contract?

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An option is like an insurance contract because it is the right to a benefit with no residual obliga...View the full answer

Derivatives Principles And Practice

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