What Is an Artificial Variable? Why Is It Necessary

question 12

Short Answer

What is an artificial variable? Why is it necessary?

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Definitions:

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain time period.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specific time frame.

Long Straddle

A long straddle strategy involves simultaneously buying a put and call option on the same asset with the same strike price and expiration date, benefiting from a strong move in either direction.

Stock Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a stock at a specified price within a certain period.