How Would You Delta Hedge an 'At-The-Money' Long Call Option

question 202

Multiple Choice

How would you delta hedge an 'at-the-money' long call option?

• A) Go short of the underlying commodity equal to 50% of the size of the option contract
• B) Go long of the underlying commodity equal to 50% of the size of the option contract
• C) Go long of the underlying commodity equal to the full size of the option contract
• D) Go short of the underlying commodity equal to the full size of the option contract

---

Definitions:

Passive Portfolio Management

An investment strategy that seeks to replicate and hold a market index or benchmarks, minimizing buying and selling to reduce costs.

Diversified Portfolios

Diversified portfolios comprise a mix of investments across various asset classes, aiming to reduce risk by not overly concentrating assets in one area.

Investment Performance

An assessment of how an investment has done over a specific period, often compared to a benchmark or standard.

Financial Intermediaries

Institutions that act as middlemen between savers and borrowers, facilitating the flow of funds in the financial system.