A trust manager for a $100,000,000 stock portfolio wants to minimize short term downside risk using Dow put options The options expire in 60 days, have a strike price of 9,700, and a premium of $50 The Dow is currently at 10,100 How many options should she use Long or short How much will this cost ...

The trust manager needs 10000000010100 9901 contracts This will cost ...

A trust manager for a $100,000,000 stock portfolio wants to minimize short-term downside risk using Dow put

Question:

A trust manager for a $100,000,000 stock wants to minimize short-term downside risk using Dow put options. The options expire in 60 days, have a of 9,700, and a premium of $50. The Dow is currently at 10,100. How many options should she use? Long or short? How much will this cost? If the is perfectly correlated with the Dow, what is the value when the option expires, including the premium paid?

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...