Does option owner need to hedge?

This is regarding R29 EOC 18

Comment #2 : “The Sure covered call position provides a maximum per share gain of $2.20 and a breakeven underlying price at expiration of $32.80.”

call is out of money.

If an options dealer takes the other side of the Sure option position, the dealer’s initial option delta and hedging transaction, respectively, will be:

Dealer’s Initial Option Delta Dealer’s Hedging Transaction A Negative Buy the underlying B Positive Buy the underlying C Positive Sell the underlying

Answer is C.

I am confused if dealer is buying the call, does he need to hedge the transaction? (isn’t he buying the option?)

my thinking is that because he’s long call (thus delta is positive), he needs to short asset to hedge

delta part I got.

hedging I didn’t. Which risk is he hedging?

If he is buying a call, he is selling the stock.

He is not a trader, he’s a dealer. e.g., doesn’t want ‘exposure’

call is an option.

he will only exercise call if its in the money.

if the call is in the money, he can always exercise it and sell underlying in spot market.

what exposure does he have?

the exposure that stock falls in price and option expires OTM