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The current price of a non-dividend-paying stock is $30. Over the next six months, it is expected to rise to $37 or fall to $25.
The current price of a non-dividend-paying stock is $30. Over the next six months, it is expected to rise to $37 or fall to $25. Assume the risk-free rate is zero. An investor sells six-month put options with a strike price of $32. How would you hedge this position and carefully explain why?
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