Explain How an Investor Can Use a Share- Index Option

question 64

Essay

Explain how an investor can use a share- index option to hedge a portfolio of common shares.

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Definitions:

Cones

Cells in the retina known as photoreceptors are crucial for seeing colors and operate optimally under well-lit conditions.

Rods

Photoreceptor cells in the retina of the eye that are highly sensitive to low levels of light and are primarily responsible for night vision.

Fovea

A tiny pit located in the macula of the retina that provides the clearest vision of all by having a high concentration of cones and no rods.

Color Vision

The ability of the visual system to distinguish objects based on the wavelengths of the light they reflect or emit.