Alibaba Holding Group Limited had a closing price of HK$299.8 on Tuesday 3^rd Nov. After market had closed, news broke that the planned IPO for Ant financial had been suspended. On Wednesday 4^th Nov morning when HKEX opened for trading Alibaba was trading at $273, a 8.9% price drop.

Imagine you were working for a bank who had sold put options on Alibaba with strike price of HK$300, with expiration on 6^th Nov. The bank sold the put options using the price suggested by Black-Scholes. They were hedging the options as if the BSM model was exactly true.

What is the status of your hedge portfolio on Wednesday morning?