Options sellers who are delta-hedging would most likely
A) sell when markets are falling.
B) buy when markets are rising.
C) sell when markets are falling and buy when markets are rising.
D) sell whether markets are falling or rising.
E) buy whether markets are falling or rising.

Question

Quizplus · Accepted Answer

Delta-hedging involves adjusting a position to maintain a delta-neutral portfolio. When the market falls, the delta of a short option position becomes more positive (or less negative), prompting the seller to sell to rebalance. Conversely, when the market rises, the delta becomes more negative (or less positive), leading the seller to buy to maintain neutrality.

Options Sellers Who Are Delta-Hedging Would Most Likely