Question: Question 4 (a) You are given the following data on call and put premiums in pence per share for Company Longland shares, which are currently

Question 4 (a) You are given the following data on call

Question 4 (a) You are given the following data on call and put premiums in pence per share for Company Longland shares, which are currently priced in the cash market at 1.3 in August. Each contract refers to 1000 shares Strike price November call premium November put premium 1.14 0.25 0.30 1.57 0.22 0.26 You own 5000 shares in Company Longland and worry that the share price might fall to 1. (1) Discuss a hedging strategy using one of the above contracts (i) Calculate value of your net hedged position at cash price of 1 and 2 for the underlying share in November respectively

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