Hedge ratios for long call positions are ________, and hedge ratios for long put positions are ________.
A) negative; negative
B) negative; positive
C) positive; negative
D) positive; positive

Question

Quizplus · Accepted Answer

Hedge ratios for long call positions are positive because as the price of the underlying asset increases, the value of the call option increases. For long put positions, hedge ratios are negative because as the price of the underlying asset decreases, the value of the put option increases.

Hedge Ratios for Long Call Positions Are ________, and Hedge