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You Own 9,500 Shares of GO Stock Which Is Currently

question 64

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You own 9,500 shares of GO stock which is currently valued at $48 a share. The $50 put has a premium of $2.50 and a put delta of -.58. What position should you take in $50 put contracts to hedge your stock against a $1 decrease in price?


Definitions:

Total Revenue

The total income received by a firm from the sale of goods or services before any expenses are deducted.

Price Range

Price Range refers to the spread between the highest and lowest selling prices of a product or service in the market.

Unit Elastic

A situation in which a percentage change in price leads to an equivalent percentage change in quantity demanded, illustrating a direct one-to-one relationship.

Income Elasticity

An assessment of the variation in consumer demand for a product or service based on fluctuations in the consumer's income.

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