When using shares to delta hedge a long call option position, after a rise in the underlying share price, the hedger will need to rebalance the position by: A. increasing a short stock position. B. reducing a long stock position. C. reducing a short stock position.

The correct answer is A. Any idea why B wouldn’t work?

It’s Wiley’s free mock, so maybe there’s no explanation.

Ns = -delta * Nc (Ns = Number of shares, Nc = Number of call options)

If the underlying share price increases in value, delta for call option will increase now. Number of call options (Nc) is fixed. This implies to maintain delta hedge, more number of stocks to short.

Delport needs to sell shares in the underlying equity.

“By selling put options to his client, Delport is net long the underlying equity. Therefore, the hedge needs to be a short position. He must sell shares to hedge his exposure.”

Therefore, Pintoj seems to be right. I used same math logic as you before.

Put Delta is negative. He shorted Put. (-)- delta * (No of stocks) would be positive not negative by using this logic but correct answer is he should sell stocks to maintain delta hedge.