The Formula for Determining the Number of Stock Index Option $\times$

question 43

Multiple Choice

The formula for determining the number of stock index option contracts needed to hedge an equity portfolio is:

• A) (Portfolio beta \(\times\) portfolio value)/(Option vega \(\times\) Option contract value)
• B) (Portfolio beta \(\times\) portfolio value)/(Option theta \(\times\) Option contract value)
• C) (Portfolio beta \(\times\) portfolio value)/(Option delta \(\times\) Option contract value)
• D) (Portfolio standard deviation \(\times\) portfolio value)/(Option Beta \(\times\) Option contract value)
• E) (Portfolio standard deviation \(\times\) portfolio value)/(Option delta \(\times\) Option contract value)

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Intense Fear

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A temporary loss of consciousness due to a drop in blood flow to the brain, often resulting in a brief fall.

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Generalized Anxiety Disorder

a chronic disorder characterized by excessive, long-lasting anxiety and worry about nonspecific life events, objects, and situations.