1. 

   yogesh167 Member

   Hello
   
   Hope you are doing well.
   
   The solution says that - for dynamic hedging the investor may want to purchase -1/D options for each unit of underlying asset in the portfolio.
   Why minus sign is used? is it because of put options?

    

   yogesh167, Aug 24, 2020

   #1
2. 

   Gresham Arnold ActEd Tutor Staff Member

   Yes, the delta of a put option is negative (as the price of the underlying asset falls, a put option becomes more valuable)

    

   Gresham Arnold, Aug 27, 2020

   #2
3. 

   yogesh167 Member

   Thanks lot Gresham

    

   yogesh167, Aug 28, 2020

   #3

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