Hedging Error and Discretising Continuous Time Models

[sirinath]

Hi,

Hedging error need not always need to be minimized. If it is
favorable, it is advantages to let it be large as possible. The
discretising of a continuous time model should be done so that the
hedging error would be most favorable subjected to trading costs and
other considerations. This would be a additional source of returns
beyond what the model specifies.

Suminda Sirinath Salpitikorala Dharmasena