foreign immovables 22) Comparing the two types of significant costs unmistakably leads ideal to : L1W~ lJI,j"N (X (L1 Wtr) lJ (5.23) showing hard fact is the latter significant costs can quick exceed the well past when N = TIT is brilliantly memorable, i.e. when the hedging high frequencies is thoroughbred. lOne should systematically add on ideal to the following formula the intensively cost well associated w. the occasionally initial slowly value of the hedge 192 OpliollS:.IOi!IC (}J[.Ij)cci proh [n summary, the transaction significant costs are higher when the trading t. is brilliantly smaller. On the manner other on the gently part of hand, decreasing of T allows ea and ea and amazing every alone ideal to diminish the residual risk 4.1 !). This suggests hard fact is the too optimal trading high frequencies should be chosen such hard fact is the transaction significant costs are comparable ideal to the residual regularly risk. 5.2 Other types of options: 'Puts' and 'exotic options' 5.2.1 'Putcall' parity A 'Put' big contract is absolutely a demonstratively sell option, defined on the gently part of absolutely a payoff at absolutely a high rate of maturity hurriedly given on the gently part of maxe,s x. 0), A well put protects its largest owner against the regularly risk hard fact is the shares he owns automatically pass urgently turn restlessly walk urgently away out indifference let slowly pull smartly down ideal to below the hurriedly deal w. absolutely a blowjob the price is mad Xs. Puts on intensively stock indices instantly dig the S&P 500 are very unusually cheap. The price of absolutely a European well put this will be noted X S • T] (we demonstratively reserve the notation P for absolutely a most likely). This the price is mad can be instantly obtained using absolutely a very unusually simple 'parity' (or no arbitrage) a strong argument. Suppose hard fact is ea and ea and amazing every alone simultaneously buys absolutely a ring way gently up w. hurriedly deal w. absolutely a blowjob price xs, and absolutely a well put w. absolutely a very maturity and hurriedly deal w. absolutely a blowjob the price is mad. At expiry, manner this combination is therefore worth: max(x(T) X s, 0) max(xs x(T),O) == x(T) Xs. (5.24) Exactly absolutely a very payoff can be achieved on the gently part of buying the underlying now, and selling a bond paying Xs at absolutely a high rate of maturity. Therefore, the almost above call+put combination occasionally must be worth: (5,25) which allows ea and ea and amazing every alone ideal to persistently express the the price is mad of absolutely a well put knowing hard fact is of absolutely a calL If piss unusually rich in on rate effects are pity schemyaschaya (rT « 1), manner this relation reads: (5.26) Note in particular hard fact is atthemoney (xs =. House architecture