The Gamma of a Put Is Typically Highest When

question 5

Multiple Choice

The gamma of a put is typically highest when

• A) The stock price is much lower than the strike price.
• B) The stock price is in the region of the strike price.
• C) The stock price is much higher than the strike price.
• D) The information is insufficient to answer this question.

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Definitions:

Larger

Having greater size, quantity, or magnitude than something else or than usual.

Coefficient of Determination

A statistical measure, often denoted as R^2, that represents the proportion of the variance for a dependent variable that's explained by one or more independent variables in a regression model.

Slope

The rate of change in the dependent variable for a unit change in the independent variable in a linear relationship.

Regression Line

A line of best fit through a scatterplot of data points in regression analysis, showing the relationship between the independent and dependent variables.