On this page
Read the difference equation
Claim amounts 30/0 at underlying prices 130/80 require Δ×50=30. Therefore Δ=30/50=0.6 underlying units per claim. The currency-unit differences cancel into a holding quantity.
Test the inverted fraction
Using 50/30=1.666667 would produce an underlying-leg state difference of approximately 83.333333, rather than the required 30. A fixed cash leg cannot repair that difference because it is identical in both states.
Keep the state direction consistent
Using lower-minus-higher in both numerator and denominator still gives 0.6. Reversing only one of them gives −0.6, another error.
| Expression | Result |
|---|---|
| (30−0)/(130−80) | 0.6 |
| (0−30)/(80−130) | 0.6 |
| (0−30)/(130−80) | −0.6, inconsistent order |
Reconstruct both terminal equations
After computing the ratio, solve one cash component and substitute into both states. A hedge number that matches only one state after an arbitrary cash adjustment is not a complete replica.