Note that the expression that is functionally dierentiated in the numerator
is the marginal indierence price. Thus, this equation has a straightforward
economic interpretation: The functional derivative in the numerator gives the
marginal gain in the price v one can generate by shifting from the optimal
trading strategy . The factor in front of the functional derivative converts
this into a marginal gain in utility. This gain in utility stemming from v is to be
balanced by the loss in utility that is incurred to the wealth process (without
the claim) by deviating from , which one nds in the denominator3.