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A stock price is $74, and current risk free interest rates are 2%. If the put...

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Finance

A stock price is $74, and current risk free interest rates are2%. If the put option with a $100 strike price expires in 6 months,and the call option is trading at $26.25, how would you arb thisoption?

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3.9 Ratings (764 Votes)
Stock current price 74 Put option Strike price 100 Expiry 6 months Riskfree rate 2 Risk free rate for 6 months 2612 1 or 001 Call option price 2625 Present value of EP EP1i    See Answer
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A stock price is $74, and current risk free interest rates are2%. If the put option with a $100 strike price expires in 6 months,and the call option is trading at $26.25, how would you arb thisoption?

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