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

question 39

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 −.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:

Bizarre Behavior

Actions that are extremely unusual or significantly atypical, often indicative of a psychiatric condition or psychological distress.

Undifferentiated Schizophrenia

A subtype of schizophrenia wherein symptoms do not clearly fit the categories of paranoid, disorganized, or catatonic types, showing a mixed or fluctuating picture.

Delusions

Fixed and erroneous beliefs that are held despite evidence to the contrary, often seen in psychiatric conditions.

Hallucinations

Perceptions in a conscious and awake state in the absence of external stimuli, which have qualities of real perception.