how would these work out with put options…am confused…or they only work with calls?
They work with both. It all depends on your exposure. Assume you have 100 shares. That means you have 100 Delta’s. You can either sell 2 ATM (contract size 100) calls or buy 2 ATM puts (contract size 100). Both will give you a Delta neutral position. If you are short shares it’s the other way around.
for a short postion on the stock…the delta wud be negative rite?
Yes, then you would have a delta position of -100 (with my example of 100 shares). One remark: A delta neutral hedge is a dynamic hedge. So you will consistently have to rebalance (even when spot doesn’t change).
Why 2 ATM contracts of 100 when you hold 100 shares. Wouldn’t this double your hedge?
It also depends on the hedge ratio as well.