“The hedge position is established to reduce the exposure to certain equity positions by writing call options on those equity positions. The necessary number of short option positions per share of stock held is calculated as the inverse of the option delta.”
This comment is said to be correct. How come writing a call options reduces the exposure? It only eliminates upside in exchange for premium. And I understand, this has nothing to do with exposure, which is the amount at risk.
Thanks for help.