Implement a delta hedge of your position

Reference no: EM133325614

Question: You own 400 shares of a stock that is trading at $25 per share. You find on the market a put option on this share trading at $6.25 with a beta of 0.5. You are afraid the stock price can go down in the short-term but do not wan to sell it. Explain which option trade you should make to implement a delta hedge of your position. The stock price goes down by 5.00%: prove that your hedge is effective.

Reference no: EM133325614

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Implement a delta hedge of your position : Explain which option trade you should make to implement a delta hedge of your position. The stock price goes down by 5.00%: prove that your hedge is effective

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