Question

Put Call Parity Using the Apple (AAPL) option chain, the stock price is $226.82, the term...

Put Call Parity

Using the Apple (AAPL) option chain, the stock price is $226.82, the term is 45 days, estimate a risk-free rate (T-bill), use the 225 strike, use the bid/ ask mean quote call = $10.175. Using Put Call Parity solve for the put and please show all you work.

Homework Answers

Answer #1

Solution.>

The put call parity is:

C + X * e^-r*t = P + S

Exercise price (X) : $225

Call option price (C) : $10.175

Put option price (P) : ?

Let us assume Risk-free rate (r) T-bill to be: 2%

Current market price (S) : $226.82

Time to maturity (t) : 0.125 year [ 45days/360days]

Let’s plug these values in the put-call parity equation:

10.175 + 225* e^(-2%*0.125) = P + 226.82

234.613 = P + 226.82

P = 7.793

Hence, Put Price = $7.793

Note: Give it a thumbs up if it helps! Thanks in advance!

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are considering purchasing a call option on a stock with a current price of $31.59....
You are considering purchasing a call option on a stock with a current price of $31.59. The exercise price is $33.1, and the price of the corresponding put option is $3.81. According to the put-call parity theorem, if the risk-free rate of interest is 1.6% and there are 45 days until expiration, what is the value of the call? (Hint: Use 365 days in a year.)
Today’s price of Apple (AAPL) is $200 per share. AAPL does not pay dividends. The annualized...
Today’s price of Apple (AAPL) is $200 per share. AAPL does not pay dividends. The annualized volatility of AAPL is 15 percent. The c.c. risk-free interest rate is one percent. Assume there is no arbitrage and the Black-Scholes model assumptions hold. What is the price of a European call option on AAPL with a strike of $200 and a maturity of two months?
Consider a European call option and a European put option on a non dividend-paying stock. The...
Consider a European call option and a European put option on a non dividend-paying stock. The price of the stock is $100 and the strike price of both the call and the put is $104, set to expire in 1 year. Given that the price of the European call option is $9.47 and the risk-free rate is 5%, what is the price of the European put option via put-call parity?  
Hennepin stock currently sells for $38. A one-year call option with strike price of $45 sells...
Hennepin stock currently sells for $38. A one-year call option with strike price of $45 sells for $9, and the risk-free interest rate is 4%. Using put-call parity, what is the price of a one-year put with strike price of $45 (using continuous compounding)? Group of answer choices a. $9.00. b.$12.89. c. $13.77. d. $14.24. e. None of the above.
You want to buy an American Put on Apple (AAPL) with a strike price of $290....
You want to buy an American Put on Apple (AAPL) with a strike price of $290. Apple is currently trading for $282.12, has a u of 1.13, and a d of 0.88. The risk free rate is 1% per period. Use a two period binomial model. What is the most you should pay for that put? Note: Answer in dollars per share, round to the nearest penny.  
You want to buy an American Put on Apple (AAPL) with a strike price of $290....
You want to buy an American Put on Apple (AAPL) with a strike price of $290. Apple is currently trading for $282.12, has a u of 1.10, and a d of 0.90. The risk free rate is 1% per period. Use a two period binomial model. What is the most you should pay for that put? Note: Answer in dollars per share, round to the nearest penny.
QUESTION 14 XYZ stock, currently trading at $45, has the following quotes from its option chain...
QUESTION 14 XYZ stock, currently trading at $45, has the following quotes from its option chain expiring in 6-months:: Call Strike = 48, Last Price=2.40, Bid=2.05, Ask=2.75 Put Strike = 43, Last Price= 1.55, Bid=1.08, Ask=1.70 What is the maximum gain (G) and loss (L) per share for a collar contract at these strike prices if you buy XYZ stock at the current price? G=6.75, L=unlimited G=4.67, L=0.33 G=3.35, L=1.65 G=4.05, L=0.95 QUESTION 15 You want to sell a naked...
Imagine that you are unable to short-sell a particular stock. Using put-call parity, replicate a short...
Imagine that you are unable to short-sell a particular stock. Using put-call parity, replicate a short position in the stock, assuming that the stock pays no dividends, there is a put and a call option, both of which have the same exercise price, K, and the same time to expiration, T. You are able to borrow and lend the continuously compounded risk free rate, r.
Suppose that a 6-month European call A option on a stock with a strike price of...
Suppose that a 6-month European call A option on a stock with a strike price of $75 costs $5 and is held until maturity, and 6-month European call B option on a stock with a strike price of $80 costs $3 and is held until maturity. The underlying stock price is $73 with a volatility of 15%. Risk-free interest rates (all maturities) are 10% per annum with continuous compounding. Use put-call parity to explain how would you construct a European...
For a European call option and a European put option on the same stock, with the...
For a European call option and a European put option on the same stock, with the same strike price and time to maturity, which of the following is true? A) Before expiration, only in-the-money options can have positive time premium. B) If you have a portfolio of protected put, you can replicate that portfolio by long a call and hold certain amount of risk-free bond. C) Since both the call and the put are risky assets, the risk-free interest rate...