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You own 1,000 shares of ABC stock at $10 per share; and you are concerned about a price decline. You decided to use put option
You own 1,000 shares of ABC stock at $10 per share; and you are concerned about a price decline. You decided to use put option to protect your stocks. The delta of the put option is -.30. a) How many put options you will buy?b) Explain how this hedge works when the stock price declines by $1.
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