Your firm has sold long-term government bonds short on a when-issued basis; your firm must purchase the bonds and deliver them when they are issued in six months. To hedge this risk,you could
I. buy at-the-money put options on bonds.
II. sell bond futures contracts.
III. write at-the-money call options on bonds.

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The Answer of Your firm has sold long-term government bonds short on a when-issued basis; your firm must purchase the bonds and deliver them when they are issued in six months. To hedge this risk,you could
I. buy at-the-money put options on bonds.
II. sell bond futures contracts.
III. write at-the-money call options on bonds.

Your Firm Has Sold Long-Term Government Bonds Short on a When-Issued