A manufacturer's profit model is expressed by (ST)=1405.ST, nine months from today. The interest rate is 6%. How can you hedge the volatility, if we have the following information on forward and options contracts: a. Use only forward b. Use only put option c. Use only call option d. Use put \& call simultaneously Describe your conclusion as to which option listed about produces the BEST result. r=6%;T=9m=0.75 Forward: F0,0.75=19 Put option: K=18,P(18,0.75)=1.150 Call Option: K=20,C(20,0.75)=1.345 A manufacturer's profit model is expressed by (ST)=1405.ST, nine months from today. The interest rate is 6%. How can you hedge the volatility, if we have the following information on forward and options contracts: a. Use only forward b. Use only put option c. Use only call option d. Use put \& call simultaneously Describe your conclusion as to which option listed about produces the BEST result. r=6%;T=9m=0.75 Forward: F0,0.75=19 Put option: K=18,P(18,0.75)=1.150 Call Option: K=20,C(20,0.75)=1.345