
Listen let me first tell you what is a call option or put option
Incall option, we bid that price of this share will go up. So we either purchase or sell the stock. In this case, strike price is usually above the share price.
In the Put option, we bid that price go down. So we either purchase P+, or we sell P-. The strike price may be above the current price or lower than the current cost.
In the above example, both options have the same stock, strike price, maturity, and premium. That means the strike of both is either above the price or lower than the price but equal for both.
The strike price, maturity, and stock can be the same, but premiums cant is the same.
So the right answer is not possible.
A European call and a European put option have the same underlying stock, strike price, maturity date and premium. What can you say about this situation?
A European call option and put option on a stock both have a strike price of $45 and an expiration date in six months. Both sell for $2. The risk-free interest rate is 5% p.a. The current stock price is $43. There is no dividend expected for the next six months. a) If the stock price in three months is $48, which option is in the money and which one is out of the money? b) As an arbitrageur, can...
A European call option and put option on a stock both have a strike price of $25 and an expiration date in six months. Both sell for $3. The risk-free interest rate is 10% per annum, the current stock price is $23, and a $1 per share dividend is expected in 2 months. Identify the arbitrage opportunity open to a trader.
Problem 12. A European call and put option on a stock both have a strike price of $30 and an expiration date in three months. The price of the call is $3, and the price of the put is $2.25. The risk free interest rate is 10% per annum, the current stock price is $31. Indentify the arbitrage opportunity open to a trader.
Consider a three-year European call option with the strike price of $150. The underlying stock will pay $10-dividend two years later from now. The current stock price is $170. The risk-free rate is 3% per annum. Find the range of the call prices that do not allow any arbitrage.
1. You are the buyer of a put option which has a put premium of $2.30. The strike price is $83 and the underlying stock price is $82.50. What is your profit or loss? a. Loss $230 b. Gain $50 c. Gain $230 d. Loss $180 e. None of the above. 2. You are the seller of a put option. The put premium is $5.50 and the exercise price is $105. If the underlying stock price is $110, what is...
A call option has a premium of 2.50, the strike price is 23, and the underlying stock price is 22. What is the option's time value?
consider a call option and put option on the same underlying stock with the same exercise price and time to maturity.the call price is 2.59,the underlying stock price is 28.63,the exercise price on both options is 26.18,the risk-free rate is6.21%,the time to maturity on both options is 0.47 years and the stock pays a 1.64ishare divident in 0.28 years ,determine the price of the put price now.
A put option and a call option on a stock have the same expiration date and the same exercise (or strike price). Both options expire in 6 months. Assume that put-call parity holds and interest rate is positive. If both call and put options have the same price, which of the following is true? A) Put option is in-the-money. B) Call option is in-the-money. C) Both call and put options are in-the-money. D) Both call and put options are out-of-the-money.
You purchase a European put option on XYZ stock with strike price 50. What is the payoff to the option if XYZ stock is trading at 48 on the expiration day? You purchase a 1-year European call option on ABC stock with strike price 100. The option premium is $10. The effective annual interest rate is 10%, so that 100 dollars lent for 1 year will return 110 dollars. What is the PROFIT if ABC stock is trading at 111...
Consider a put option and a call option with the same strike price and time to maturity. Which of the following is TRUE? It is possible for both options to be in the money. One of the options must be either in the money or at the money. One of the options must be in the money. It is possible for both options to be out of the money.