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The finance literature has found that options that are deep out-of-the-money (i.e., the underlying assets price would need to change a lot for the option
The finance literature has found that options that are deep out-of-the-money (i.e., the underlying assets price would need to change a lot for the option to have a positive payoff) are overpriced and earn low average returns. Suggest an explanation for this finding.
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