##### Q-56. In order to hedge a short call option position, a manager would have to buy enough of the underlying to equal the delta times the number of options sold. In this case, delta = 0.5, so for every two options sold, the manager would have to buy a share of the underlying security. | Financial Risk Manager Part 1 Quiz - LeetQuiz
Financial Risk Manager Part 1
Explanation:
For a short call position with delta = 0.5:
Each short call option has negative delta exposure
To hedge, the manager needs to buy the underlying stock
Calculation: Number of options × Delta = 400 × 0.5 = 200 shares
Therefore, the manager must buy 200 shares of the underlying security to achieve delta neutrality
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Q-56. In order to hedge a short call option position, a manager would have to buy enough of the underlying to equal the delta times the number of options sold. In this case, delta = 0.5, so for every two options sold, the manager would have to buy a share of the underlying security.
