where...is the net value of each call option if the asset price has gone up.
In order for the portfolio to have the same value at the end of the year irrespective of whether the asset price has gone up or down, we must then have....., that is,....
Solve this linear equation immediately to give us the magic result that Alice must sell H=3 call options to insulate her portfolio from price fluctuations and ensure the value of $28 at the end of the year.