To create a delta-neutral portfolio, an investor sold 15,000 call options (now exactly at the money) long 7,500
To maintain a delta-neutral position, a delta totaling -200 then: Suppose you find an at-the-money put option on Company X trading at a delta of -0.5. Buying 4 of these put options will result in a total delta of (400 x -0.5) or -200.
Gamma Neutral Portfolios are option positions that do not change delta when the underlying security moves significantly up or down. Gamma-neutrality is a process known as gamma-hedging, usually achieved by adding additional option contracts to a portfolio as opposed to the current position.
Delta Hedging is an options strategy aimed at neutralizing direction by establishing opposite long and short positions in the same underlying. By reducing directional risk, delta hedging can isolate changes in volatility for options traders.
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Answer:
C.) $490,000
Explanation:
The Cost of goods manufactured of $680,000 <u>plus</u> the Finished Goods beginning would give us the Cost of goods available for sale. Since there is no <em>Finished Goods beginning (0)</em>, The Cost of goods available for sale will then automatically be $680,000.
Then <u>deduct</u> the Finished Goods ending of $190,000. The result would give us $490,000 which is the Cost of Goods Sold.
<em>(680,000 - 190,000 = 490,000)</em>
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