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 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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