A Study on the Efficiency of the Market for Dutch Long Term Call Options

F.A. de Roon, C.H. Veld, J. Wei

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Abstract

We investigate the efficiency of the market for 5 year call options which are traded on the European Options Exchange in Amsterdam.We study both delta, delta-vega, and delta-gamma neutral arbitrage portfolios.We do not detect any serious inefficiencies in the market for long term call options.This result is in line with previous studies on different kinds of call options and warrants. The results for the delta-vega and delta-gamma neutral arbitrage strategies differ from the results of the simple delta-neutral strategies in two ways: they lead to positive results more often, but the variance of these results is also larger.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages23
Volume1996-33
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-33

Keywords

  • Options
  • futures markets
  • The Netherlands

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