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Explain the advantages and disadvantages of each strategy

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Question - A. Adam is an asset manager and he is overweight in equities because he believes that equities have more upside in the long run. However, he is worried that any negative news regarding COVID-19 may cause a short-term sell off in the stock markets. What kind of strategy would you recommend for him to partially hedge his portfolio and why? What are the advantages and disadvantages of the recommended strategy?

B. Adam thinks that any sell-off will be limited in size and duration. He is also concerned that implied volatility is very high, so he would like to minimize his vega exposure. Please outline 2 different strategies that Adam could follow and explain the advantages and disadvantages of each strategy.

Reference no: EM133035583

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