Assume that you have a long position in 50 1-month call option contracts. How do you hedge this long position in calls using 1-month puts? Should you long or short the puts? And how many put contracts should you trade? Assume that the current delta of the call option is 0.861 and delta of the put option is -0.139.

a) Should you long or short the put option contract?

b) How many put options contracts should you trade?

Answer rating: 100% (QA)

Answer To hedge a long position in call options using put options you should take the opposite posit... View the full answer