put options delta hedging

[derswap07]

2012 CFAI morning exam q 9:
Part A ii asks for how many # of shares should he trade??? Can somebody clarify what’s going on here?
Help much appreciated.

 

[ochk88]

Using the same hedging formula, but this time you do not calculate number of option, but number of shares.

 

[Alcfa]

To hedge 1 put you need to sell 0.3088 shares
=>To hedge 2000 puts, you need sell 2000*0.3088 = 617.6 shares.

 

[hatom]

617 is the correct answer the one in the guidline answers is not correct its the amount needed to buy 617 options

 

[derswap07]

Thanks guys so much. I got it now.