PRMIA Exam 8007 Topic 1 Question 32 Discussion

Actual exam question for PRMIA's 8007 exam

Question #: 32
Topic #: 1

Suppose I trade an option and I wish to hedge that option for delta and veg

a. Another option is available to trade. To complete the hedge I would

Atrade the underlying in such a way as to make the portfolio delta and vega neutral.

Btrade the other option in such a way as to make the portfolio delta and vega neutral.

Ctrade the other option in such a way as to make the portfolio vega neutral, and then trade the underlying in such a way as to make the portfolio delta neutral.

Dtrade the underlying in such a way as to make the portfolio delta neutral, and then trade the other option in such a way as to make the portfolio vega neutral.

Show Suggested Answer

Suggested Answer: C

by Ettie at May 09, 2022, 04:19 AM

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