Estimate expected number of times stock will bought or sold

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1. Why did portfolio insurance not work well on October 19, 1987?

2. The Black-Scholes-Merton price of an out-of-the-money call option with an exercise price of $40 is $4. A trader who has written the option plans to use a stop-loss strategy. The trader's plan is to buy at $40.10 and to sell at $39.90. Estimate the expected number of times the stock will be bought or sold.

Reference no: EM131237786

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