Delta-hedging

lCalculate the hedging errors if the stock price falls by $0.5, $1, $3, and $5.

lCalculate the hedging errors if the stock price increases by $0.5, $1, $3, and $5.

Suppose the price of a call option follows the curve described by C (S) (S/20) Delta is the (partial) derivative with respect to S: A (S) (1/5) (S/20) Plugging in 40 for S gives A(40) (1/5) (40/20) 1.6