How much is liquidity worth?
Theoretically, PE should return higher than the S&P due to liquidity state. In a perfect market, what would the return difference be?
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Easy theoretical approach: simply the difference between price European and American style call options.
Except the difference is just marginal in some dividend situations… you can always sell the option and so it’s not like it’s illiquid this is a bad example
This guy options
God said: any discount or premium to anything in any situation is 20%. Amen.
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