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can I get some help on futures and options. Thank you Maybank shares are currently trading at RM10.00 in the stock market. 3-month call and
can I get some help on futures and options. Thank you
Maybank shares are currently trading at RM10.00 in the stock market. 3-month call and put options with RM 10.00 exercise price are being quoted at RM0.90 and RM0.50 respectively. The risk-free rate is currently at 6% per year. Assume European options. (a) Using put-call parity and applying both mathematical and diagram method prove that there are mispricing on the spot price, call and put options. [12 marks] (b) Indicate your arbitrage strategy and compute the profit amount you can make for one lot/contract. Assume that 3 months later Maybank share is at RM11.00 [13 marks]
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