A stock is currently selling for $20.65.A 3-month call option with a strike price of $20 has an option premium of $1.30.The risk-free rate is 2 percent and the market rate is 8 percent.What is the option premium on a 3-month put with a $20 strike price? Assume the options are European style.
A) $0.00
B) $0.15
C) $0.35
D) $0.55
E) $0.75

Question

Quizplus · Accepted Answer

Put option price = $1.30 - $20.65 + $20 / (1 + 0.02)^{3 / 12} = $0.55

A Stock Is Currently Selling for $20