If the Hedge Ratio for a Call Option Is 0

question 36

Multiple Choice

If the hedge ratio for a call option is 0.5 and you own 100 shares of the underlying stock, which of the following actions would result in a risk-free hedge?

• A)Buy 200 calls on the stock.
• B)Sell 100 calls on the stock.
• C)Sell 200 calls on the stock.
• D)Buy 50 calls on the stock.

---

Definitions:

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment.

Problem Solving

The process of identifying a problem, finding and evaluating possible solutions, and implementing an action.

Communicating

The process of conveying information or expressing ideas and feelings through verbal or nonverbal means to someone else.

Difficult Patient

A term that describes individuals who may be challenging to manage or treat in a healthcare setting, often due to communication barriers, non-compliance, or behavioral issues.