Assume you have sold a call option and the delta of your position is -.35. If...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Assume you have sold a call option and the delta of your position is -.35. If the price of the underling asset increases by $1.80, then what is the best estimate of the change in the call option's price? Would you expect the value of the absolute value of the delta of your position to be larger or smaller if the price of the underlying asset increased by $1.80? Why? Assume you have sold a call option and the delta of your position is -.35. If the price of the underling asset increases by $1.80, then what is the best estimate of the change in the call option's price? Would you expect the value of the absolute value of the delta of your position to be larger or smaller if the price of the underlying asset increased by $1.80? Why? Assume you have sold a call option and the delta of your position is -.35. If the price of the underling asset increases by $1.80, then what is the best estimate of the change in the call option's price? Would you expect the value of the absolute value of the delta of your position to be larger or smaller if the price of the underlying asset increased by $1.80? Why?
Expert Answer:
Answer rating: 100% (QA)
If the delta of your position is 35 it means that you have sold a call option with a delta of 35 T... View the full answer
Related Book For
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders, Marcia Cornett
Posted Date:
Students also viewed these finance questions
-
Do you think that viewing a marriage proposal as a negotiation is a good idea or not? Support your response by providing likely outcomes. Using the material from the chapter, can you build a case to...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
(a) ABC is a company that manufactures computer desk. The total costs (in RM'000) when x units of computer desk are produced is given by C(x) = 12x 3 - 198x 2 + 1080x Find the level of x that the...
-
Suppose that Motorsports sales manager had telephoned Marsha Wiedmaier. Further suppose that Marsha had vouched for Michaels creditworthiness but informed Motorsport that she and her husband owned...
-
A car is making a trip in a total time of 1 0 4 min. During the first 3 7 min its average speed is 2 8 . 5 mph. What average speed of the rest of the trip is needed if the car\'s overall average...
-
To fit the quadratic regression model using MINITAB, when the \(x\) values are in C1 and the \(y\) values in \(\mathrm{C} 2\), you must select Use the computer to repeat the analysis of Example 11....
-
Why is organizational diagnosis essential to the success of any change effort?
-
On March 1, 2019, Wanda Sykes drove her 2019 SUV through Bon Temps' main street. Wanda's phone rang at an intersection. She dropped it on the passenger side as she got in. Wanda's two-year-old twins,...
-
A double pipe heat exchanger is made of a 6-nom sch 40 commercial steel outer pipe and a 5-nom sch 40S stainless steel inner pipe. The fluid in the annular space is cyclohexane that has a volumetric...
-
The following is information on the purchase and sale of merchandise transactions that occur at PT. Mayora Indah Tbk. during the period June 2019 are: 1. On June 1, 2019, merchandise was purchased at...
-
How is bad faith committed?
-
True Or False None of the states that have adopted no-fault have a pure no-fault system.
-
Equal consideration is a standard in what type of bad faith action?
-
Comprehensive insurance coverage a. does not apply to the shattering of a windshield or to the theft of valuables. b. must always be part of any standard automobile contract. c. often requires proof...
-
True Or False In no-fault states, the right to sue for torts is retained for intentional injuries inflicted with an automobile and injuries caused by intoxicated drivers.
-
Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for...
-
Time Travel Publishing was recently organized. The company issued common stock to an attorney who provided legal services worth $25,000 to help organize the corporation. Time Travel also issued...
-
Tree Row Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 95-040. Tree Row thinks interest rates will go up over the period of investment. a. Should...
-
Dudley Bank has the following balance sheet and income statement. For Dudley Bank, calculate: a. Return on equity b. Return on assets c. Asset utilization d. Equity multiplier e. Profit margin f....
-
Your company sponsors a 401(k) plan into which you deposit 12 percent of your $ 60,000 annual income. Your company matches 50 percent of the first 5 percent of your earnings. You expect the fund to...
-
A layer of water flows down an inclined fixed surface with the velocity profile shown in Fig. P1.81. Determine the magnitude and direction of the shearing stress that the water exerts on the fixed...
-
Standard air flows past a flat surface, and velocity measurements near the surface indicate the following distribution: The coordinate \(y\) is measured normal to the surface and \(u\) is the...
-
A new computer drive is proposed to have a disc, as shown in Fig. P1.84. The disc is to rotate at \(10,000 \mathrm{rpm}\), and the reader head is to be positioned 0.0005 in. above the surface of the...
Study smarter with the SolutionInn App