You Own 2,000 Shares of ABC Stock That Is Currently

question 54

Multiple Choice

You own 2,000 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 .718. How many $25 call options do you need to hedge against a -$1 change in the price of the stock?

• A) buy 2,000 options
• B) buy 3,482 options
• C) write 2,000 options
• D) write 2,786 options
• E) write 3,295 options

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Definitions:

Marketspace

An electronic digital environment where transactions and communication related to buying and selling occur.

Word-Of-Mouth Behavior

The unofficial communication among consumers about their experiences with products or services, influencing the reputation and sales of those products or services.

Buzz

The excitement and conversations created by consumers around a brand, product, or event, often through word-of-mouth.

Marketspace

A virtual space where companies and customers interact digitally for buying and selling products or services.