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The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An

The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An investor buys put options with a strike price of $41. Which of the following is necessary to hedge the position?

None of the given answers.

Buy 0.2 shares for each option purchased.

Buy 0.8 shares for each option purchased.

Sell 0.2 shares for each option purchased.

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