Explain how Roche could hedge its warrant exposure
What will be an ideal response?
The Bull Spread position was created by investors purchasing put options at SFr 7,000, selling call options at SFr 10,000, and taking a long-forward position in Roche's shares. This means Roche sold puts at SFr 7,000, bought call options at SFr 10,000, and was short its forward shares. One alternative for Roche to hedge its position would be to take the same position as investors (i.e., purchase put options at a SFr 7,000 strike price, sell call options with a strike price of SFr 10,000, and take long forward positions in its shares).
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A) only historical information. B) only the information related to events that have already occurred. C) all publicly known information related to past events and announced future events. D) all information including predictions about future information.