Subject Business Finance

Question

You own 1,000 shares of XYZ and have purchased ten protective put contracts. The puts have a data of -0.317.

a.)What is your position delta?
b.)Instead of buying puts, how many of your shares should you sell short to achieve the same results?

Solution Preview

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Answer:

Delta of the shares = 1.
Delta of puts = -0.317
Each put contract is based on 100 shares and so the put position comprises of 100 * 10 = 1000 shares....

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