The Current Price of a Non-Dividend-Paying Stock Is $30

question 2

Multiple Choice

The current price of a non-dividend-paying stock is $30.Over the next six months it is expected to rise to $36 or fall to $26.Assume the risk-free rate is zero.
-An investor sells call options with a strike price of $32.Which of the following hedges the position?

• A)Buy 0.6 shares for each call option sold
• B)Buy 0.4 shares for each call option sold
• C)short 0.6 shares for each call option sold
• D)Short 0.6 shares for each call option sold

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