Following the 2007-09 financial crisis, mainstream finance theory was criticized for failing to forecast the market … crash, which resulted in large losses for investors. Has our finance theory, which many consider an idealization that does … not take reality into account, failed investors? Do we need to reconsider the theory and how it is taught (and practiced …

In this paper, we combine modern portfolio theory and option pricing theory so that a trader who takes a position in a …