... :Subtracting one of these from the other and solving for1T , we obtain the “delta-hedging for-mula”1T =V2TH , V2TTS2TH , S2TT;(1.12) and substituting this into either ... Finance. References:1. B. Oksendal, Stochastic Differential Equations, Springer-Verlag,19952. J. Hull, Options, Futures and other Derivative Securities, Prentice Hall, 1993.14.1 Brownian Motion(See ... thatf tk+1 , f tk=f0tktk+1, tk:CHAPTER 8. Random Walks103whereMkis a symmetric random walk under the risk-neutral measure, denoted byfIP. SupposeS0=4. Here are...