Question

You own 3,550 shares of a stock that is currently priced at $34 a share. Given this price, the option delta for a $30 call option on this stock is 0.923. How many $30 call option contracts do you need to hedge against a -$1 change in the price of the stock? Multiple Choice: buy 4 option contracts, buy 38 option contracts, write 4 option contracts, write 38 option contracts, write 385 option contracts. 

          You own 3,550 shares of a stock that is currently priced at $34 a share. Given this price, the option delta for a $30 call option on this stock is 0.923. How many $30 call option contracts do you need to hedge against a -$1 change in the price of the stock? Multiple Choice: buy 4 option contracts, buy 38 option contracts, write 4 option contracts, write 38 option contracts, write 385 option contracts.
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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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You own 3,550 shares of a stock that is currently priced at $34 a share. Given this price, the option delta for a $30 call option on this stock is 0.923. How many $30 call option contracts do you need to hedge against a -$1 change in the price of the stock? Multiple Choice: buy 4 option contracts, buy 38 option contracts, write 4 option contracts, write 38 option contracts, write 385 option contracts.
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Transcript

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00:01 Hello, students, we need to write here.
00:02 You write four next put option contracts, the option price is given, the strike price is given, and stop price is given.
00:10 What is your initial margin we need to write here? so we can write here the margin requirement, the margin requirement, we can write here the margin requirement is greater of.
00:31 So first we need to write our neck.
00:35 So basically 4 multiplied by option price which is $5 plus and 4 .2 and we need to take stock prices 45 right.
00:47 And difference we need to take as 3.
00:50 We will solve this and the second case we need to write here...
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