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4) Suppose that stock XYZ is trading at $50 and that t in 1 year has an implied volatility of 25%. Suppose that: A=.5, T=

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4) Suppose that stock XYZ is trading at $50 and that t in 1 year has an implied volatility of 25%. Suppose that: A=.5, T= .03 a) A certain trader intended to buy it and delta-hedge it. Which are the appropriate trades to do so? b) After having set up the necessary trades XYZ rallies 50 cents. If the trader wants to remain delta-hedged, what should she trade

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