You Hold a Portfolio of a Long Position in a Call

question 35

Multiple Choice

You hold a portfolio of a long position in a call and a short position in a put, both for the same strike and maturity, both written on a non-dividend paying stock. Which of the following statements is most correct?

• A) The delta of the portfolio increases when the stock price increases.
• B) The delta of the portfolio stays the same when the stock price increases.
• C) The delta of the portfolio decreases when the stock price increases.
• D) The delta of the portfolio may increase or decrease when the stock price increases.

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Definitions:

Finance Lease

A type of lease arrangement where the lessee is considered the de facto owner of the leased asset, being responsible for maintenance and other associated costs, and typically involves commercial equipment or vehicles.

Three Parties

A term generally used in contracts or legal situations where three distinct entities are involved.

Lease

A contractual agreement whereby one party grants another the right to use property, equipment, or facilities for a specified period in exchange for payment.

Title

A legal term referring to a rightful ownership of property, assets, or the evidence thereof.