1.What is the difference between bullish and bearish? How are volatility strategies different? Specify the difference...

 

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1.What is the difference between bullish and bearish? How are volatility strategies different? Specify the difference in terms of strategy and number of options. 2.Compare the volatility strategise of a straddle, strangle, strip, and strap. Explain how to create each strategy, and how they compare and contrast. 3.What are the maximum gains and losses on buying a butterfly spread? Use strike levels of K1 = 100, K2 =110, and K3=120, and trade 400 options; their premiums are P1, P2, and P3. When would you prefer this strategy? Provide 2 reasons. 6.What's the difference between real world probabilities and risk-neutral probabilities? Explain the role of each in pricing derivatives. Provide at least 2 arguments 7.What does Girsanov's Theorem allow us to do? Give at least 2 responses. 1.What is the difference between bullish and bearish? How are volatility strategies different? Specify the difference in terms of strategy and number of options. 2.Compare the volatility strategise of a straddle, strangle, strip, and strap. Explain how to create each strategy, and how they compare and contrast. 3.What are the maximum gains and losses on buying a butterfly spread? Use strike levels of K1 = 100, K2 =110, and K3=120, and trade 400 options; their premiums are P1, P2, and P3. When would you prefer this strategy? Provide 2 reasons. 6.What's the difference between real world probabilities and risk-neutral probabilities? Explain the role of each in pricing derivatives. Provide at least 2 arguments 7.What does Girsanov's Theorem allow us to do? Give at least 2 responses.

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1 Bull ish refers to an expectation that the price of an asset will increase while bear ish refers to an expectation that the price of an asset will d... View the full answer