Portfolio neutralisation using options

Discussion in 'Stocks' started by Nic88, Apr 28, 2014.

  1. Nic88

    Nic88

    How do you neutralise delta and gamma of the following portfolio using a option with delta=0.4, Gamma=1.3 and Vega=0.5?

    Portfolio:
    Long 500 call with delta=0.5, gamma = 1.2 and vega=1.5
    Short 500 call with delta=0.4, gamma = 0.6 and vega=0.3
    Short 2000 put with delta= -0.8 , gamma = 0.9 and vega=0.7
    Short 500 call with delta=0.7, gamma = 1.3 and vega=1.4

    Would your portfolio delta be:
    (500x0.5)+(-500x0.4)+(-2000x(-0.8))+(-500x0.7)= 1300?