A question on Schweser Q bank asks which of the following is false in relation to portfolio hedging: The choice below is NOT the correct answer. I got this right b/c there was a very obvious wrong answer, but can someone remind me why the below is true. For a fixed portfolio insurance horizon, using put options generally requires less rebalancing and monitoring than with the use of futures contracts. Cheers -
Is it possibly related to the mark to market feature of the futures?
not sure… perhaps they assume you can just buy the put and wait until maturity, while for the futurues you must roll (assuming you are using short term futures for hedging)
^^ that’s what I thought, but then why assume that you can get the option to match the maturity but not the future? Anyway, perhaps not worth thinking about too much given the source… Thanks- E