wilslm

Answer C. the delta can be graphically represented by the tangent line. If you figure the payoff diagram of a put option, the the delta for St<X is -1 and 0 when St>X. Problem is that the graph of an option is not exactly a straight line but more some sort of an hyperbole with the tangent line less steep for St<X (when the option is in the money), hence larger than -1 and then increasing to 0.



Edited 1 time(s). Last edit at Friday, March 18, 2011 at 01:58PM by R Cash.