Question

Delta of a call option is 0.85. Stock price is currently $50. How much money do you need to borrow to hedge a short position in 200 call contracts

Answer 1

Given the option of a delta call is 0.85 and the stock price at $50,

To calculate the amount of money one will make a short position in 200 calls

Amount in dollars= Number of calls * delta call option* Number of shares per contract*stock price

Given the number of shares per contract is X

=200*0.85*X*50

=8500X

Step-by-step explanation:

Given the option of a delta call is 0.85 and the stock price at $50,

To calculate the amount of money one will make a short position in 200 calls

Amount in dollars= Number of calls * delta call option* Number of shares per contract*stock price

Given the number of shares per contract is X

=200*0.85*X*50

=8500X