This document presents a comprehensive solution to an assignment on options, futures, and risk management. The assignment covers various aspects of financial derivatives, including the Black-Scholes model, binomial examination, and the valuation of call and put options. It explores concepts such as the force of interest, volatility, and the impact of time to expiration on option pricing. The solution includes calculations and explanations for different scenarios, such as simulating stock prices, determining the delta of a special option, and analyzing the payoff functions of various options strategies. Furthermore, the assignment delves into the practical application of options, providing insights into covered call and secured put strategies. Overall, the solution offers a detailed analysis of options trading and risk management, providing students with a thorough understanding of the subject matter.
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