
Explanation:
Correct answer: B — Implement static hedge
Barrier options are commonly traded to:
While barrier options can be used in hedging contexts, "implement static hedge" is not typically listed as a primary motive to trade a barrier option in this setting, so it is the exception.
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Question 15.01. Each of the following is a possible motive to trade a barrier option EXCEPT (and give example for each valid motive):
A
Reduce the option’s cost
B
Implement static hedge
C
Add leverage to a directional view
D
Reduce the cost of tail insurance
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