Look at the Facebook option quotes in Figure 14 and focus on the call and put options with a strike price of $80. Can you use put-call parity to infer what the market price of Facebook stock must have been when these option prices were quoted? To keep things simple, assume the options expire in one month, and that the risk-free rate at the time was 0%.

Hint: To use put-call parity, you need to find the market price of a risk-free, zero-coupon bond with a face value equal o the strike price of the options.)

Now, focus on the Facebook call and put options that have a strike price of $87.50. If you use put-call parity to find the price of Facebook stock at the time those call prices were quoted, would you expect to get the same answer that you found above? Do you in fact get the same answer?

FIGURE 14.1 Quotations for Facebook Stock Options The quotes for calls and puts of a specified expiration period are listed down either side of the strike price. In addition to the last price the option traded at for the day and its end-of-day bid and ask price, the change from the previous day's last transaction price is shown. (Source: Data from http://www.nasdaq.com, accessed July 6, 2015.] Option Chain | Most Actives | Greeks FB Options : Compositel-Calls & Puts Near the Money J Type: (Monthly Go Jul 15 | Aug 15 | Sep 15 | Oct 15 | Nov 15 Dec 15 | Jan 16| Jan 17 | Near Term | All Option Chain for Facebook, Inc. (FB) Calls Last Chg Bid Ask Vol Open Int Root StrikePutsLast Chg Bid Ask Vol Open Int Aug 21, 2015 8.40 -0.20 8.35 8.50 233 3142 FB 80 Aug 21, 2015 1.22 0.03 1.21 1.22 1110 6230 Aug 21, 2015 6.60 -0.10 6.50 6.60 109 5118 FB 82.5 Aug 21, 2015 1.85 0.04 1.84 1.85 365 4491 Aug 21, 2015 4.90 -0.20 4.90 4.95 2330 66167 FB 85 Aug 21, 2015 2.68 0.03 2.70 2.71 1212 54821 Aug 21, 2015 3.53 -0.17 3.50 3.55 1493 14194 FB 87.5 Aug 21, 2015 3.85 3.80 3.85 255 2178 Aug 21, 2015 2.44 -0.14 2.42 2.43 2518 18663 FB 90 Aug 21, 2015 5.15 -0.05 5.15 5.25 168 539 6.80 6.90 132 326 Aug 21, 2015 0.96 -0.09 0.96 0.97 431 12742 FB 95 Aug 21, 2015 8.38 8.70 8.85 0 99 Aug 21, 2015 1.56 -0.16 1.57 1.58 439 8698 FB 92.5 Aug 21, 2015 6.85