hedging

AMITAG1990
Finance Junkie
Posts: 89
Joined: Sat Sep 22, 2012 12:35 pm

hedging

Postby AMITAG1990 » Sat Nov 03, 2012 7:42 pm

please tell me, if we purchase a 200 call option contract each on 10 shares with time to maturity of 60 days and the delta of a option on 1 share is 0.5 then what action must take on underlying stock to hedge this..??
whether we should long or short the stock..??
in my opinion it should be shorted but ans is long position.

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swarnendupathak
Finance Junkie
Posts: 119
Joined: Mon Sep 17, 2012 11:06 am

Re: hedging

Postby swarnendupathak » Mon Nov 05, 2012 10:00 am

For me also we should short...

Swarnendu

balajismz
Finance Junkie
Posts: 63
Joined: Mon Nov 05, 2012 9:13 am

Re: hedging

Postby balajismz » Mon Nov 05, 2012 10:22 am

Depends on ur position in the shares, if you are short in shares then long call options

content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: hedging

Postby content.pristine » Mon Nov 05, 2012 7:58 pm

You are right..
We are aware of this error, but can't fix it til the season end otherwise it would erase everyone's performance in that quiz til now.

Thus, when you go long a stock, you must short call options..
8-)


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