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Absolutely amazing explanation. Why clarifying question, if I may? Are option contracts always for 100 options or we are making an assumption here based on what is common in the market place?

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Hi David This is supposed to be an easy one but I am struggling with one Schweser question relating to delta hedging. Suppose that a call option on Stock Y with a strike price of $50 trades at $3 and that the delta on this option is equal to 0.5. Derivatives trader Ralph currently owns 10,000...

Super clear. Thank you David. Much appreciated.

Hi all I may have missed something in the forum, and I am happy for someone to point me to an existing thread rather that opening a new one if this question already exists. I cannot figure out why the Var(EDF) is equal to EDF*(1-EDF). This may be a simple question, which may also indicate that...

This is brilliant, David. Many thanks.

Hi David Last one from me until the next weekend. With regard to the Taylor series of approximation, are we supposed to be able to calculate that on the exam? I am conscious that it involves cumbersome calculations, etc... Kind regards N

Thanks David. You have this knack for explaining complicated stuff easily so that everyone understands... Much appreciated.

Thanks David. This is helpful. Schweser are saying "the probability of large deviations from normality occurring are much less likely under the regime-switching model. The regime-switching model captures the conditional normality and may resolve the fat tail problem".

Well, I passed CFA Level 1 in 2012, then got a busy job in London, got married, had a baby and then decided to resume my FRM studies instead. What a mess, huh? Need to get myself together and pass FRM this year and perhaps continue with CFA Level 2 next year. One step at a time...

David, I am not quite clear as to why under the regime switching volatility model the probability of fat tails is much lower? Can you please clarify? Many thanks!

So much better that Schweser. I bought both so far BT's notes are way more helpful.

Hi David I am not quite sure why when calculating the risk neutral probability we do not use the risk free rate. Would you please shortly explain that? I note that it costs nothing to take short or long position in a futures contract but that just confuses me even more... Apologies for the...

well the NYTimes from back then stated that the capital was only £5.5m as opposed to $20m in the case study. Irrelevant as this has no impact on the LO.

has anyone joined me? I haven't got the notification of that.

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Is this still on?

Hi David, Great stuff. Thanks. I have that paper. It is difficult to find now the KMV papers since they were acquire by Moody's The reason I asked is the I am writing my MBA dissertation on structural models. I wanted to include a section with controversies. What I found so far is that...

David, do you remember which reading, or research study claims that? Many thanks

David, thank you so much. Very thorough explanation as always. It just needs time to settle in my brain now :)