1. Suppose you own 512 shares of stock and want to hedge by writing call options. A call option is available on the stock and has a delta of 0.2. How many options are needed to create the hedge? Enter your answer as a positive number rounded to the nearest integer.
2. Suppose you own 515 shares of stock and want to hedge by purchasing put options. A put option is available on the stock and has a delta of -0.4. How many options are needed to create the hedge? Enter your answer rounded to the nearest integer.
3. Suppose you own 116 shares of stock currently selling for $26 per share and want to hedge by writing call options. A call option is available today on the stock and has a premium of $2 and a delta of 0.7.
At the termination of the hedge, the stock is worth $30, and the call is worth $6.
Calculate the total hedge profit.
Enter your answer rounded to the nearest integer.
4. Suppose you own 681 shares of stock currently selling for $38 per share and want to hedge by purchasing put options. A put option is available today on the stock and has a premium of $7 and a delta of -0.6.
At the termination of the hedge, the stock is worth $29, and the put is worth $12.
Calculate the total hedge profit.
Enter your answer rounded to the nearest integer.