You Have Written a Call Option on 1 Share of Z

question 80

Multiple Choice

You have written a call option on 1 share of Z stock that is worth $15.You expect the price of the stock to either move to $20 or $10 over the next year.How many shares of Z stock should you own to perfectly hedge your position on the call option? The strike price on the option is $15.

• A) 2 shares
• B) 1 share
• C) .5 shares
• D) none of the above

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Definitions:

Auscultate

The act of listening to the sounds made by internal organs, typically with a stethoscope, as a part of medical examination.

Binaurals

Earpieces or devices designed for use with both ears, commonly used in stethoscopes for clearer sound detection.

Diaphragm

A large, dome-shaped muscle located below the lungs that plays a crucial role in respiration.

Septic Shock

A severe and life-threatening condition caused by an overwhelming infection leading to dangerously low blood pressure and organ failure.