A hedge ratio for a call is always
A) equal to one.
B) greater than one.
C) between zero and one.
D) between negative one and zero.
E) of no restricted value.

Question

Quizplus · Accepted Answer

The hedge ratio for a call option, also known as the option's delta, measures the rate of change of the option price relative to the change in the price of the underlying asset. It typically ranges between 0 (for deep out-of-the-money calls) and 1 (for deep in-the-money calls), indicating how much the price of the option is expected to move for a one-unit move in the price of the underlying asset.

A Hedge Ratio for a Call Is Always