Which of the following is correct to complete the formula for ascertaining the number of option required to hedge an equity portfolio?
Change in stock price $\times$ Shares = Option __________ $\times$ Number of Options
A) Delta
B) Beta
C) Gamma
D) Rho
E) Theta

Question

Quizplus · Accepted Answer

The formula requires the use of the Delta, which measures the ratio of the change in the price of the underlying asset to the corresponding change in the price of a derivative contract. It is used to determine the number of options required to hedge an equity portfolio against potential losses due to movements in the price of the underlying asset.

Which of the Following Is Correct to Complete the Formula ×\times×

Which of the Following Is Correct to Complete the Formula $\times$