Illustrates an example of measure of risk aversion

Question

Illustrates an example of measure of risk aversion?

Answer 1

For illustration you could value options as the specifically equivalent value within the real random walk, or maybe like the real expectation of the present value of the option’s payoff plus or minus several multiple of the standard deviation. Here plus when you are selling, minus when buying. The ‘multiple’ shows a measure of your risk aversion.