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:

Inventory Ledger

A document or system that tracks the quantities, costs, and types of a company's inventory on hand, including goods in transit and on order.

Determining Cost of Inventory

Involves valuing the items sold and those remaining in stock by allocating costs based on specific identification, FIFO, LIFO, or weighted average methods.

FIFO

"First In, First Out," an inventory valuation method where goods first added to inventory are the first ones to be used or sold.

LIFO

Last In, First Out, an inventory valuation method where the last items placed in inventory are the first to be used or sold.