Suppose you subscribe to a service that gives you estimates of the theoretically correct volatilities of stocks.

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Suppose you subscribe to a service that gives you estimates of the theoretically correct volatilities of stocks. The implied volatility of a particular option is substantially higher than the theoretical volatility. What action should you take? Why?

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Introduction To Derivatives And Risk Management

ISBN: 9781305104969

10th Edition

Authors: Don M. Chance, Robert Brooks

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Question Posted: Apr 07, 2016 08:33 AM

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Suppose you subscribe to a service that gives you estimates of the theoretically correct volatilities of stocks.

Question:

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If you accept the theoretically correct standard deviation as the true volatility then the ma...View the full answer

Introduction To Derivatives And Risk Management

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