In the derivatives reading 64 (problem 4), I understand how to calculate the risk-free hedge. However, how do you know whether to long or short the call options in period 1 and period 2? Thank you.
In the derivatives reading 64 (problem 4), I understand how to calculate the risk-free hedge. However, how do you know whether to long or short the call options in period 1 and period 2? Thank you.