A portfolio of derivatives on a stock has a delta of 250 and a gamma of -100. An option on the stock with a delta of 0.5 and a gamma of 0.1 can be traded. What positions need to be taken to make the portfolio both delta and gamma neutral?

Question 35 options:

Long 1000 options and short 750 shares of stock

Short 1000 options and buy 750 shares of stock

Long 500 options and short 500 shares of stock

Short 500 options and buy 500 shares of stock

Question 36(3 points)

A U.S. company will receive 5 million from the sales in Britain in 3 months. Which of the following is the best strategy if they want to hedge this foreign currency exposure?

Question 36 options:

They can hedge the exposure by purchasing British pounds in the spot market.

They can hedge the exposure by borrowing British pounds and selling them in the spot market.

They can hedge the exposure by taking a short futures position in British pounds.

They can hedge the exposure by taking a long futures position in British pounds.