The current price of a stock is 50 a call option on the, Ask an Expert

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The current price of a stock is $50. A call option on the stock has a premium of $5 and delta of 0.65. A trader writes 1 option contract where each option contract is on 100 shares of the stock. The trader delta-hedges his option position using the stock shares. (1) What should the trader do now to hedge his option position? (2) Next day, the stock price closes at $51 and the option premium becomes $5.65. The new delta of the option is 0.7. What should the trader do to maintain delta-hedged?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91802712

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