Discuss the Three Methods Used to Reduce the Risk of Extreme

question 9

Essay

Discuss the three methods used to reduce the risk of extreme price moves.Ask the class to also elaborate on why simple delta hedging is inadequate to the task.

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Definitions:

Unions

Organizations formed by workers to protect their rights, negotiate collective contracts, and provide support to members on employment matters.

National Labor Union

A historic labor federation in the United States, founded in 1866, that aimed to unify workers across different trades to fight for labor reforms.

Trades

Occupations that typically require specialized skills and knowledge, learned through on-the-job experience or formal training, often involving manual work and craftsmanship.

Crafts

Relates to activities involving skill and artisanship in the creation of handmade goods or the execution of specialized work, often emphasizing traditional techniques.