Using the Put-Call Parity relationship, find the value of a put option (same strike, expiration as...
| Using the Put-Call Parity relationship, find the value of a put option (same strike, expiration as the call option) using the following information: | ||||||
| Current stock price | $33 | risk-free rate | 6% | |||
| Call option strike price | $32 | Call option current value | $6.56 | |||
| Option time to maturity | 1 | years | ||||
Homework Answers
According to call put parity theorem ,
Call price + [Strike price *e^-rt] = Put price +current price
6.56 + [32*e^-.06*1] = P + 33
6.56 + [32 * e^-.06] = P +33
6.56 + [32*.94176] = P +33
6.56 + 30.13632 = P +33
P = 36.69632 - 33
= 3.69632 (rounded to 3.70 )
**Find value of e ^-.06 using financial calculator
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