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Hi John. Your videos always help me a lot.
My question:
Is it possible for the number of options can exceed the number of shares to delta hedge?
Or is it just a theoretical assumption? Because from my point of view, option dealings are a derivative of the underlying asset which in this case is a share. So maybe it will be impossible that number of options exceeds that of shares? I’d appreciate if you shed some light on this. Thank you.The number of options will always exceed the number of shares (as it does in the example I work through). The reason is that as the share price changes, the change in the option price will be less than the change in the share price. So it needs more options to ‘cancel out’ the change in the value of the shares.
Then total value of options cannot exceed the underlying assets, not the quantity of it right? I think I was mixed up with the value and just simple quantity.
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