You Own 4,800 Shares of a Stock That Is Currently

question 56

Multiple Choice

You own 4,800 shares of a stock that is currently priced at $34 a share.Given this price,the option delta for a $30 call option on this stock is 0.955.How many $30 call option contracts do you need to hedge against a -$1 change in the price of the stock?

• A) buy 50 option contracts
• B) buy 503 option contracts
• C) write 50 option contracts
• D) write 503 option contracts
• E) write 5,026 option contracts

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Definitions:

Domestic Price

The price of goods or services within a country's borders, influenced by local supply and demand conditions.

World Price

the international market price of a good or service, influenced by worldwide demand and supply conditions.

Absolute Advantage

The ability of an entity to produce a good or offer a service more efficiently than its competitors, using fewer resources.

Production Data

Production data refers to quantitative information related to the amount, type, and efficiency of output produced by a company, industry, or economy over a specific period.