A Delta for a Portfolio of Options on the Same

question 10

Multiple Choice

A delta for a portfolio of options on the same stock is:

• A) the sum of the delta for the individual options times the number of shares of each option
• B) the sum of the delta for the individual options times the percentage of each option in the portfolio's value
• C) the sum of the delta for the individual options times one minus the percentage of each option in the portfolio's value
• D) the sum of the delta for the individual options divided by the number of shares of each option
• E) cannot be computed if the options have different strikes

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Definitions:

Margin of Safety

This financial ratio measures the difference between actual or expected sales and the break-even point, indicating the cushion a company has before it incurs a loss.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.

High-low Method

A way to estimate the cost-behavior formula that uses the highest and lowest levels of activity to determine fixed and variable costs.

Activity Index

A measure or indicator used to gauge activity levels within a particular domain, such as manufacturing or stock trading volume.