Question: Do not pick particular number, work out the theory. Recall that the hedge ratio for a European call option is given by H = Cu

Do not pick particular number, work out the theory. Recall that the hedge ratio for a European call option is given by H = Cu Cd uS0 dS0 Characterize the behavior of the hedge ratio in the limit as it gets farther in the money and as it gets farther out of the money, i.e., lim S0 H =? lim S00 H =? Hint: Note that Cu and Cd are really functions of the underlying stock price S0

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