You Own 5,000 Shares of Miller Stock, Which Is Currently

Multiple Choice

You own 5,000 shares of Miller stock, which is currently, valued at $37 a share. The $40 put has a premium of $2.30 and a put delta of −.25. What position should you take in $40 put contracts to hedge your stock against a $1 decrease in price?

A) buy 200 contracts
B) buy 1,200 contracts
C) buy 20,000 contracts
D) write 200 contracts
E) write 1,200 contracts