You Own 1,800 Shares of Textile Stock Which Is Currently

question 45

Multiple Choice

You own 1,800 shares of Textile stock which is currently valued at $62 a share.The $65 put has a premium of $4.26 and a put delta of -0.60.What position should you take in $65 put contracts to hedge your stock against a $1 decrease in price?

• A) buy 3 contracts
• B) buy 30 contracts
• C) buy 300 contracts
• D) write 3 contracts
• E) write 30 contracts

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Definitions:

Disinhibition Theory

A theory suggesting that reduced inhibition of specific neurons or brain regions can lead to an increase in functional activity, often discussed in the context of behavioral psychology.

Behavioral Myopia

“Nearsighted” behavior displayed under the influence of alcohol, wherein local and immediate cues become prominent; remote cues and consequences are ignored.

Domoic Acid

A neurotoxin produced by certain types of algae that can accumulate in shellfish, leading to amnesic shellfish poisoning in humans.

Hippocampus

A critical structure within the brain's temporal lobe, associated with the formation of memories and spatial navigation.