Explain the pattern of implied volatility that is often referred to as a smirk. (Use a call as your example.)
What will be an ideal response?
Implied volatility tends to be higher for in the money options and lower for out of the money options. The effect is magnified when time to expiration is lower.
Business
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With $1.5 million in an account expected to earn 8% annually over the retiree's 30 years of life expectancy, what annual annuity can be withdrawn, beginning today?
A) $112,148.50 B) $120,000.00 C) $133,241.15 D) $123,371.44
Business
Which of the following product mix pricing strategies involves pricing multiple products to be sold together?
A) product line pricing B) product bundle pricing C) optional product pricing D) by-product pricing E) captive product pricing
Business