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Without being too trivial on my part this is what you are looking for.
If we take your two equations
0.030x + 0.020y =0 (gamma neutrality)
0.180x + 0.150y =-10 (Vega risk)
and we will put it in a matrix
0.030 0.020 0
0.180 0.150 -10
our goal is to get the above to look like this
1 0 ?
0 1 ??
where ? will be your x solution and ?? will be your y solution
Here are the basic rules.
If I change a number above in one of the rows by mulitplication (or division
when multiplying a fraction) you must do it for the entire row.
Also you can add and subtract one row from another. So lets play the game.
Lets turn our 0.030 into a 1.
so lets blast the first row with 1/0.30
1/0.30( 0.30 0.020 0)
0.180 0.150 -10
this gives 1 2/30 0
0.180 0.150 -10
now lets turn that 0.180 into a 0.
So lets multiply row one by -0.180 and then add it to row two
this will give
1 2/30 0
0 0.132 -10
Next turn that 0.132 into a 1 like we did in out first step and then turn the
2/30 into a zero for your last step.
This is called Gausian elimination or reduced row reduction. If you have a
highschool algebra book go to the back and look up matrices.
Hope this helps.
On Tue, 27 May 1997 08:52:54 -0700,
Dick Jurgens wrote...
>I hope nobody "rolls their eyes" too much on this one...I haven't had to
>use high school algebra since HS, and I'm trying to remember how to
>solve 2 formula, 2 variable equations.
>
>(By the way, this problem is on page 441 of "McMillan On Options" and is
>a formula for determining gamma-delta neutrality, just in case you have
>the book)
>
>0.030x + 0.020y =0 (gamma neutrality)
>0.180x + 0.150y =-10 (Vega risk)
>
>Solve for X and Y
>Show all work
>
>I tried to add the columns like a common addition problem, then letting
>x=1 solve for y, and visa versa....I just didn't come out with the same
>answer <g> Hope somebody still remembers how to do this!
>
>Thanks
>
>
Harley Meyer
meyer093@xxxxxxxxxx
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