Suppose you delta hedge a put option position by buying stocks. If stock price moves up by 10%, what will happen? Assuming all other things stay the same except for the stock price change.

A. Yourhedgedpositionwillgenerateprofitsbecauseofpositivegamma.

B. Yourhedgedpositionwillgenerateprofitsbecausewhathedgingdoesistoprotect against losses at the same time to maintain profits.

C. Yourhedgedpositionwillgeneratelossesbecauseyourputoptionwilllosevalueand the leverage inherent in option position magnifies the losses.

D. Your hedged position will generate neither profit nor loss.