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Pat
Posts: 28
Joined: September 30th, 2001, 2:08 am

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April 18th, 2002, 1:12 pm

Diceman: hedging with options always chews up a little bid-ask spread, which is tolerable if it is fairly static. At least in fixed income, delta hedging can be considered as "free." On the other hand, delta hedging doesn't immunize one from vega risk. Plusses & minuses
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DiceMan
Posts: 0
Joined: November 5th, 2001, 1:41 pm

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April 19th, 2002, 9:15 am

Ok!In order to buy an insurance you have to be a little bit risk-averse. But once you've bought it, it makes more sense to take risk...
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Paul
Posts: 7048
Joined: July 20th, 2001, 3:28 pm

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April 19th, 2002, 9:28 am

Surely not, Diceman! The whole risk/return/insurance decision should all be considered as one. P
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