Sample Application F in the DerivaGem Application Builder Software considers the static
Chapter 26, Problem 26.28(choose chapter or problem)
Sample Application F in the DerivaGem Application Builder Software considers the static options replication example in Section 26.17. It shows the way a hedge can be constructed using four options (as in Section 26.17) and two ways a hedge can be constructed using 16 options. (a) Explain the difference between the two ways a hedge can be constructed using 16 options. Explain intuitively why the second method works better. (b) Improve on the four-option hedge by changing Tmat for the third and fourth options. (c) Check how well the 16-option portfolios match the delta, gamma, and vega of the barrier option.
Unfortunately, we don't have that question answered yet. But you can get it answered in just 5 hours by Logging in or Becoming a subscriber.
Becoming a subscriber
Or look for another answer