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Bonus question: Amazon is currently trading for $27 per share. The stock pays no dividends. The price of a put option on Amazon with a
Bonus question:
Amazon is currently trading for $27 per share. The stock pays no dividends. The price of a put option on Amazon with a maturity of one year and strike price $30 is $2.6, and the price of a call option on Amazon with a maturity of one year and strike price $30 is $2. Dose the option mispriced or is there any arbitrage chance? If yes, what s your risk-free arbitrage trading strategy? Write down the detailed process. The risk-free rate of interest is 6%. (Hint: Based on put-call parity, which side is overpricing?)
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