If the hedge ratio for a stock call is 0.50, the hedge ratio for a put with the same expiration date and exercise price as the call would be
A) 0.30.
B) 0.50.
C) −0.60.
D) −0.50.
E) −0.17.

Question

Quizplus · Accepted Answer

The hedge ratio for a put option can be found by subtracting the hedge ratio of a call option from 1. Since the hedge ratio for the call is 0.50, the hedge ratio for the put is 1 - 0.50 = 0.50, but since it's a put option, it's negative, making the correct answer -0.50.

If the Hedge Ratio for a Stock Call Is 0