You Are Long a Portfolio of Vanilla Call Options

question 13

Multiple Choice

You are long a portfolio of vanilla call options.Which of the following will help you hedge away your convexity (gamma) ?

• A)Buying a portfolio of in-the-money vanilla put options.
• B)Buying a portfolio of out-of-the money vanilla put options.
• C)Buying a portfolio of in-the-money cash-or-nothing put options.
• D)Buying a portfolio of out-of-the money cash-or-nothing put options.

Understand the concept of profit maximization in the product life cycle stages.

Comprehend the limitations of cost-plus pricing in profit maximization.

Recognize the characteristics of price elasticity throughout the product life cycle.

Identify the benefits of unbundling strategies in price-sensitive markets.

---

Definitions:

Independently

Acting or capable of acting without dependence on others; self-sufficiently.

Density-independent Factors

Environmental factors that affect the size of a population regardless of the population density, such as weather and natural disasters.

Abiotic

Non-living chemical and physical parts of the environment that affect living organisms and the functioning of ecosystems.

Interspecific Competition

The interaction between members of different species that vie for the same resource in an ecosystem (e.g., food or living space).