If the hedge ratio for a stock call is 0.60, the hedge ratio for a put with the same expiration date and exercise price as the call would be
A)0.60.
B)0.40.
C)-0.60.
D)-0.40.

Question

Quizplus · Accepted Answer

The hedge ratio for a put option is typically negative, and it can be calculated as -1 + the hedge ratio for the call option. Therefore, if the hedge ratio for the call is 0.60, the hedge ratio for the put would be -1 + 0.60 = -0.40. Therefore, the correct choice is D.

If the Hedge Ratio for a Stock Call Is 0