Explain How Options Can Be Used to Manage Risk

question 38

Essay

Explain how options can be used to manage risk.Provide an example using a call option and another example using a put option.

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Definitions:

Self-actualization

The realization or fulfillment of one’s talents and potentialities, especially considered as a drive or need present in everyone.

Incongruence

A state where there is a mismatch or lack of alignment between one's self-perception and reality, often leading to psychological discomfort.

Behavioral Genetics

A field of study that examines the role genes and the environment play in shaping behaviors.

Heritability

A measure of how much of the variation in a trait within a population can be attributed to genetic differences among individuals.