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a. Explain the delta of an option, and what a delta hedging strategy is. b. Suppose that the stock price is $100 and the option
a. Explain the delta of an option, and what a delta hedging strategy is.
b. Suppose that the stock price is $100 and the option price is $10, and delta is 0.6. If you have sold 20 call option contracts that is, options on 2,000 shares. If the stock price goes up by $1, how much would you lose from the options written? How can you hedge your position to offset the loss on the option position?
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