Question: Why do traders use volatility smiles for pricing options? A. To allow for non-lognormality of the probability distribution of future asset price B. Because it

Why do traders use volatility smiles for pricing options? A. To

Why do traders use volatility smiles for pricing options? A. To allow for non-lognormality of the probability distribution of future asset price B. Because it is consistent with recent market moves C. As a tool to reflect their views about extreme market moves D. Because extreme market moves are always more likely than Black-Scholes-Merton assumes

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