A portfolio of derivatives on a stock is currently delta neutral but has a vega of 8,000. We plan to make the portfolio both delta and vega neutral.

An option on the stock with a delta of -0.5 and a vega of 2 can be traded.

1.What position in the option will make the portfolio vega neutral?

The trader should take a [ Select ] ["long", "short"] position in [ Select ] ["0", "4,000", "16,000", "8,000"] options.

2.After this position has been taken what position in the stock is then necessary for delta neutrality?

The trader should take a [ Select ] ["long", "short"] position in [ Select ] ["0", "2,000", "4,000", "8,000"] shares of the stock.