To compute the value of a put using the Black-Scholes option pricing model, you:
A) first have to apply the put-call parity relationship.
B) first have to compute the value of the put as if it is a call.
C) compute the value of an equivalent call and then subtract that value from one.
D) compute the value of an equivalent call and then subtract that value from the market price of the stock.

Question

Quizplus · Accepted Answer

In the Black-Scholes model, the put option value can be derived by first computing the value of a call option and then using the put-call parity relationship to find the put value.

To Compute the Value of a Put Using the Black-Scholes