A Call Option on a Stock Has a Delta of 0.3.A

question 7

Multiple Choice

A call option on a stock has a delta of 0.3.A trader has sold 1,000 options.What position should the trader take to hedge the position?

• A) Sell 300 shares
• B) Buy 300 shares
• C) Sell 700 shares
• D) Buy 700 shares

---

Definitions:

Deferred Tax Liabilities

Taxes that are assessed or incurred but not yet paid, typically resulting from timing differences in recognizing revenue and expenses for tax and accounting purposes.

Taxable Income

The amount of income subject to taxes, calculated by adjusting gross income by various deductions, exemptions, and adjustments specified by tax laws.

Book Income

Book income is a company's financial income as reported in the financial statements, adhering to the rules of accounting, before any tax adjustments.

Loss Carryback

An accounting technique that allows businesses to apply current year’s net operating losses to previous years’ profits to reduce tax liabilities.