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:

Information Omitted

Information that was expected or required to be included but was left out, either accidentally or intentionally.

Securities Act Of 1933

A U.S. federal law enacted to regulate the sale of securities, aimed at ensuring transparency and fairness in the financial markets.

Corporate Ownership

The possession and control over a corporation, usually through the holding of shares.

Reasonably Expected

Anticipated or foreseen based on logical or sensible grounds.