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You are the market maker for the sports betting and streaming cable service FUBO TV. Your customer wants to sell 200 Puts with a strike

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You are the market maker for the sports betting and streaming cable service FUBO TV. Your customer wants to sell 200 Puts with a strike price of $23 and 28 days until expiration. You delta-gamma hedge your position for 1 day using Puts with a strike price of $25 and half a year until expiration. The annual risk-free interest rate compounded continuously is 10%. FUBO P(23, 28 Days) after t Days 0 Stock Price Put Price Put Delta Put Gamma 25.00 0.38165 -0.18796 0.07786 22.00 1.37614 -0.51709 0.13322 FUBO P(25, 183 Days) after t Days 0 1 Stock Price Put Price Put Delta Put Gamma 25.00 2.84654 -0.375171 0.04291 22.00 4.17468 -0.51804 0.05138 3. (5 points) Compute your profit/(loss) from hedging after 1 day. Show all work. (Ans. = $13,51) b. (5 points) Compute the cash used to rebalance the portfolio on Day 1. Show all work. (Ans = $2,116.59. Value is positive since it is a Source of Cash.) You are the market maker for the sports betting and streaming cable service FUBO TV. Your customer wants to sell 200 Puts with a strike price of $23 and 28 days until expiration. You delta-gamma hedge your position for 1 day using Puts with a strike price of $25 and half a year until expiration. The annual risk-free interest rate compounded continuously is 10%. FUBO P(23, 28 Days) after t Days 0 Stock Price Put Price Put Delta Put Gamma 25.00 0.38165 -0.18796 0.07786 22.00 1.37614 -0.51709 0.13322 FUBO P(25, 183 Days) after t Days 0 1 Stock Price Put Price Put Delta Put Gamma 25.00 2.84654 -0.375171 0.04291 22.00 4.17468 -0.51804 0.05138 3. (5 points) Compute your profit/(loss) from hedging after 1 day. Show all work. (Ans. = $13,51) b. (5 points) Compute the cash used to rebalance the portfolio on Day 1. Show all work. (Ans = $2,116.59. Value is positive since it is a Source of Cash.)

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