Consider a call and a put written on a stock that pays no dividends.If the interest rate is positive and the options have the same price and identical contract terms,then which of the following is true?

Question

Quizplus · Accepted Answer

Since the call option gives the holder the right to buy at the strike price and the put option gives the holder the right to sell at the strike price, it is optimal for the holder to use the option if the stock price is less than the strike price. Therefore, if the options have the same price and identical contract terms, the stock price must be less than the strike price for both the call and put options to have value.

Consider a Call and a Put Written on a Stock