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An investor is provided with the following information on American put and call options on a share of a company listed on the London Stock
An investor is provided with the following information on American put and call options on a share of a company listed on the London Stock Exchange:
- Call price (c0) = 33p
- Put price (p0) = 49p
- Exercise price (X) = 480p
- Today: 11 June 2019
- Expiry date: 20 December 2019
- Current stock price (S0) = 458p
- Risk-free interest rate (r) = 2.4%
- The company pays no dividends.
Draw a graph showing the prices at expiry of a fiduciary call and another one showing a protective put, including all of their components, in relation to the price of the stock in a range between 350p and 600p.
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