Chapter 05 · Section 5.1

Fixed Hedge

How many put option contracts would the hedger need to purchase to establish a fixed hedge on his long position of 100 shares?

• a) 1
  Yes. This is the one-to-one relationship between the hedged position (100 shares) and the hedging instrument (1 put), which characterizes a fixed hedge. The hedger has the possibility of exercising the option. Continue
  b) 2
  c) 100

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