You Are Long a Portfolio of Vanilla Call Options

question 20

Multiple Choice

You are long a portfolio of vanilla call options. Which of the following will help you hedge away your theta risk?

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

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Definitions:

Delayed Reinforcers

Rewards that do not immediately follow a behavior but occur after some time, still affecting the likelihood of the behavior's recurrence.

Variable-Interval Schedules

A reinforcement schedule in experiments where a response is rewarded after an unpredictable amount of time has passed, used to study learning and behavior.

Primary Reinforcers

Innate reinforcing qualities like food, drink, and pleasure that fulfill basic biological needs and do not depend on learning to be effective.

Spontaneous Recovery

The reappearance of a conditioned response after a period of rest or no exposure to the conditioned stimulus.