A portfolio manager in charge of a portfolio worth $80 million isconcerned that stock prices might decline rapidly during the next six months and would like to use put options on an index to provide protection against the portfolio falling below $80 million. The index is currently standing at 4000. The multiplier on options on the index is $10. If the portfolio has a beta of 1 what position in put options is required to insure the portfolio at its current level (ignoring the option premium)?

Select one:

Long 2000 contracts.

Short 1000 contracts.

Long 1000 contracts.

Short 2000 contracts.