Here, the option price moves half as much as the stock's
{"Image DocumentName": "Here, the option price moves half as much as the stock\u2019s", "Image ImageDescription": "Here, the option price moves half as much as the stock\u2019s. Therefore, if you own one share of the stock in this example, you can hedge, that is, eliminate your risk, by selling two calls. To see how hedging works, form a hedged portfolio by buying one share and selling 2 options and find its risk-free end-of-period value. (Why is this risk-free?) Stock goes: Down Up. Own the stock Sold 2 options", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}