A call option will be worth either $18 or $7 one period from now and the call's underlying asset will be worth either $106 or $67. You already own 700 shares of the stock. How many call options do you need to trade in order to hedge the risk of the stock for the next period? Write a positive number to buy the calls and a negative number to sell them.

Answer rating: 100% (QA)

To determine the number of call options needed to hedge the risk of the stock for the next period we need to analyze the potential payoffs of the stoc... View the full answer