If there is one period remaining and no possibility of the option expiring in-the-money,the hedge ratio will be zero.

Name: If there is one period remaining and no possibility of the option expiring in-the-money,the hedge ratio will be zero.
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Question

Quizplus · Accepted Answer

If there is no possibility of the option expiring in-the-money, then there is no need to hedge as there will be no impact on the underlying asset's price. Therefore, the hedge ratio will be zero.

If There Is One Period Remaining and No Possibility of the Option