A hedge ratio for a call option is ________, and a hedge ratio for a put option is ______.
A)negative; positive
B)negative; negative
C)positive; negative
D)positive; positive

Question

Quizplus · Accepted Answer

The hedge ratio for a call option is positive because as the price of the underlying asset increases, the value of the call option also increases. For a put option, the hedge ratio is negative because as the price of the underlying asset increases, the value of the put option decreases.

A Hedge Ratio for a Call Option Is ________, and a Hedge