I: > Life insurance, health insurance and the like are sorts of call > options at the zero strike...
After a second thought, yes, health insurance is a call, but, life insurance is a put with zero exercise, assuming that there is no cannibalism, of course. When there is cannibalism, the put may go unexercised depending on the price of your corpse. Car insurance is more complex: it is a portfolio of an unknown number of calls and a put. The put, when exercised, is an absorbing state because your car should be dead for that to be exercised, whereas the calls when exercised are transient states, since you can get the car fixed after each accident in which the car remains reparable. Boy, this insurance stuff is quite complicated. Best, Sabri _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
