AARIO 1 You are an Equity portfolio manager. You can use a wide variety of derivatives for hedging or speculative purposes, You manage $300 million in capital from demanding investors. You have a target return of 12%, and your return this year, so far is 14%. The date is TODAY, and the fiscal year end for your fund is June 1. 5% of your portfolio is invested in cash earning 0%, and 95% is fully invested in physical (non-derivative) Equities. Of the 95%, you are invested roughly evenly across the 11 major sectors of the market. Your fund has a beta of 1.27% with the S $PS00 (in other words for every 1% move up/down in the S\&P 500 Index, your fund moves 1.27% ) The realized volatility of the S\&P 500 has been dropping recently, but you have reason to believe that volatility over the next 30 days will increase dramatically as market participants take profits or reallocate their portfolios into year-end. You are confident about the volatility, but not about the direction of the market. As a portfolio manager what could you do? (using derivatives of course). How would you think about the size of this new derivative position? Let's say, instead of expecting increased volatility into vear end, vou feel very confident the market will move directionally higher with mild volatility and you want to increase the leverage in the portfolio. Would you use futures or options? What size would you consider