You wish to hedge your position by buying put options with, Operation Management

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You wish to hedge your position by buying put options with

Suppose you hold LLL employee stock options representing options to buy 10,400 shares of LLL stock. LLL accountants estimated the value of these options using the Black-Scholes-Merton formula and the following assumptions:

S = current stock price = $24.67

K = option strike price = $25

r = risk-free interest rate = .042

s = stock volatility = .32

T = time to expiration = 3.5 years

You wish to hedge your position by buying put options with three-month expirations and a $30 strike price. How many put option contracts are required?

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