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user100 [1]
3 years ago
6

he hedge ratio of an at-the-money call option on IBM is 0.35. The hedge ratio of an at-the-money put option is -0.65. What is th

e hedge ratio of an at-the-money straddle position on IBM
Business
1 answer:
Kazeer [188]3 years ago
5 0

Answer:

- 0.30

Explanation:

Given the following :

Hedge ratio of an at-the-money call option on IBM = 0.35

Hedge ratio of an at-the-money put option = - 0.65

Hedge ratio of an at-the-money straddle =?

Hedge ratio of an at-the-money straddle is given by :

(Hedge ratio of an at-the-money call option + Hedge ratio of an at-the-money put option)

Hedge ratio of an at-the-money straddle :

(0.35 + (-0.65))

= (0.35 - 0.65)

= - 0.30

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