You Are Short a Put On $A B C$ Stock and Have Delta-Hedged Yourself Using the Stock

question 24

Multiple Choice

You are short a put on $A B C$ stock and have delta-hedged yourself using the stock.The delta of the put is $- 0.71$ and the gamma of the put is $+ 0.04$ .If the price of the underlying registers an increase of $0.50,to maintain your delta-hedge,you must

• A)Sell 0.04 units of the stock.
• B)Buy 0.04 units of the stock.
• C)Sell 0.02 units of the stock.
• D)Buy 0.02 units of the stock.
• (e)None of the above.

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Definitions:

Emissions Abatement

The process of reducing emissions of pollutants into the environment, typically achieved through policies, technologies, or practices that decrease the emission of harmful gases.

Marginal Cost

Cost of one additional unit of a good.

Marginal Benefit

Benefit from the consumption of one additional unit of a good.

Incentivized

Encouraged or motivated through the offering of incentives or rewards to perform a particular action or behavior.