You Own 1,500 Shares of ABC Stock That Is Currently

question 67

Multiple Choice

You own 1,500 shares of ABC stock that is currently priced at $27 a share.Given this price,the option delta for a $25 call option on this stock is 0.724.How many $25 call options do you need to hedge against a -$1 change in the price of the stock?

• A) buy 1,500 options
• B) buy 2,482 options
• C) write 1,500 options
• D) write 2,072 options
• E) write 3,295 options

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Definitions:

Middle Class

A social group between the upper and working classes, including professional and business workers and their families.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable.

Administrative Cost

Refers to expenses related to the general operation of a business, including office supplies, management salaries, and other non-production related costs.

Equilibrium Pricing

The point at which the supply of a product matches demand, setting the market price.