You Are Short a Put On $A B C$ Stock and Have Delta-Hedged Yourself Using the Stock

question 6

Multiple Choice

You are short a put on $A B C$ stock and have delta-hedged yourself using the stock. The delta of the put is $- 0.71$ and the gamma of the put is $+ 0.04$ . If the price of the underlying registers an increase of $0.50, to maintain your delta-hedge, you must

• A) Sell 0.04 units of the stock.
• B) Buy 0.04 units of the stock.
• C) Sell 0.02 units of the stock.
• D) Buy 0.02 units of the stock.
• E) None of the above.

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