Today, a stock is worth $50 and a put option on that stock is worth $10. One period from now, the stock will be worth either $60 or $43 and the put will be worth either $15 or $6. What is the hedge ratio between the put and its underlying stock? Make the option the numerator in the hedge ratio.

Answer rating: 100% (QA)

To calculate the hedge ratio between the put option and its underlying stock we need to determine th... View the full answer