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The questions are based on the trading and Valuation concept of Option a) What...

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Accounting

The questions are based on the trading and Valuation concept of Option
a) What is the rationale behind the implementation of a stop-loss trading rule for the seller or writer of an out-of-the-money call option, and why does this particular strategy tend to offer a suboptimal hedge against potential losses?
b) Could you elucidate the notion of valuation as it pertains to dividend-paying stocks within the context of American call and European call options, with a specific focus on the determination of intrinsic value?

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