Suppose that JPMorgan Chase sells call options on $$2\mathrm{.}40$ million worth of a stock portfolio with beta $=1\mathrm{.}50.$ The option delta is $0\mathrm{.}55.$ It wishes to hedge its resultant exposure to a market advance by buying a market$-$index portfolio. Suppose it use market index puts to hedge its exposure. The index at current prices represents $$2,000$ worth of stock and the contract multiplier is $400.$

Required:

How many dollars$$ worth of the market$-$index portfolio should it purchase?

What is the delta of a put option?

Complete the following:Suppose that JPMorgan Chase sells call options on $$2\mathrm{.}40$ million worth of a stock portfolio with beta $=1\mathrm{.}50.$ The option delta is $0\mathrm{.}55.$ It

wishes to hedge its resultant exposure to a market advance by buying a market$-$index portfolio. Suppose it use market index puts to

hedge its exposure. The index at current prices represents $$2,000$ worth of stock and the contract multiplier is $400.$

Required:

a$.$ How many dollars' worth of the market$-$index portfolio should it purchase?

b$.$ What is the delta of a put option?

c$.$ Complete the following:

Complete this question by entering your answers in the tabs below.

How many dollars' worth of the market$-$index portfolio should it purchase?

Note: Do not round intermediate calculations. Enter your answer in dollars and not in millions.