What Is Net Dollar Gain or Cost Required to Create

question 6

Multiple Choice

What is net dollar gain or cost required to create a short put delta hedge against a 100 short put position? Assume puts are priced at $1.98,the delta is 0.489,the stock price is $34.50,and no cost to short stock.

• A) $1,540.50 gain
• B) $1,540.50 cost
• C) $2,319.58 gain
• D) $2,319.58 cost

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Definitions:

Primarily Liable

The condition of being initially and directly responsible for fulfilling an obligation or debt, without shifting that responsibility to another party.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee's name mentioned.

UCC

Uniform Commercial Code; a set of laws that govern commercial transactions in the United States.

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Guarantees made by the seller about the quality and title of goods being sold, ensuring they are free from any claims and encumbrances.