Answer: purchase 45,500 shares.

## Explanation When an investor is **short put options**, the delta of the short put position is **positive** because: - A long put has a negative delta (typically between -1 and 0) - A short put therefore has a positive delta (between 0 and 1) Given: - Number of shares: 100,000 - Put delta: -0.455 (this is the delta for a long put) - Short put delta = -(-0.455) = +0.455 To delta hedge a short put position: - The investor needs to take an opposite position in the underlying stock - Since the short put has positive delta (+0.455), the hedge requires a negative delta position - This means **selling short** the underlying stock **Calculation:** Hedge ratio = Number of options × Delta × Option multiplier = 100,000 × 0.455 × 1 (assuming 1 share per option) = 45,500 shares Therefore, the investor should **sell short 45,500 shares** to delta hedge the position. **Correct answer: C - purchase 45,500 shares** (This appears to be incorrect based on the logic above. The correct hedge should be selling short 45,500 shares, which matches option B)

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