Explanation:

The delta-normal VaR method uses a linear approximation of option price changes based on delta. This method works well when:

• Deltas are stable: ✓ Correct - When deltas remain relatively constant over the VaR horizon, the linear approximation is accurate
• Options are at the money: ✗ Not necessarily - At-the-money options have higher gamma, making delta less stable
• The correlation matrix is available: ✗ While useful, this doesn't ensure accuracy of the delta approximation
• The delta-normal method can never be used for option contracts: ✗ Incorrect - It can be used but with limitations

The key requirement for accurate delta-normal VaR is that the delta remains relatively constant, which typically occurs for small price movements or when gamma is low.