Explain an example of superhedging
Explain an example of superhedging.
Expert
A simple illustration of superhedging would be to superhedge a short call position with buying one of the stocks and never rebalancing. Unluckily, as you can probably imagine, and positively as in this illustration, superhedging might provide you prices which differ vastly from the market.
Illustrates an example relates with risk that defined in mathematical terms.
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