A stock is currently selling for $32. The price of a $30 strike call with a 6 month expiration is $3.10. If the interest rate is 3%, what is the price of the put option assuming no dividend is paid?
A) $0.66
B) $1.15
C) $1.36
D) $1.56
E) None of the options.

Question

Quizplus · Accepted Answer

The put-call parity formula is: S + P - C = Ke^(-rT)where:S is the stock priceP is the put option priceC is the call option priceK is the strike pricer is the interest rateT is the time to expirationSubstituting the given values into the formula, we get:32 + P - 3.10 = 30e^(-0.03*0.5)32 + P - 3.10 = 29.46P = 29.46 + 3.10 - 32P = 0.56

A Stock Is Currently Selling for $32