Chapter 05 · Section 5.1

Change in the Delta Factor

If the hedger instead considered a put with a delta factor of -0.25: How many contracts would he need to delta hedge his stock position?

a) 2
No. When hedging with a put that has a Delta factor of -0.25, a greater number of contracts has to be purchased than when hedging with a put with a Delta$ factor of -0.5.
b) 4
c) 25