HOW MUCH YOU NEED TO EXPECT YOU'LL PAY FOR A GOOD PNL

That is not similar to the pnl equalling the worth compensated, as a substitute the predicted pnl with the tactic might be the same as the option value. $endgroup$Ie: If We all know the stock is going to shut close to the opening price mainly because it normally performs over a 1 vol, and its midday as well as the stock is down -ten%, we are aware

When you hedge every single moment, you wouldn't notice the entire pnl with the more substantial SD moves however, you do seize the full pnl on the smaller intraday moves. Conversely, if You simply hedge as soon as on a daily basis, you will not comprehend the entire pnl from your more compact intraday moves (like in the example) but you'd in retur