Hi, In the ASET for Q7(iii), it's stated that for a hedging portfolio, opposite positions to the delta and initial value of the options should be taken. Would like to ask why is the answer not in opposite of the options?
The ASET at the time said "As is usually the case with this type of question, the examiners allowed for the exposure to be hedged instead. That is to say, a portfolio of shares and cash needs to be found such that its initial value and the negative of its delta equals that of the call options." Check out this recent post for more details. Hope that helps.
