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On 2020-03-31, MRK traded for 75.9563 USD. In one month, MRK can either go up to 83.55 USD or down to 68.36 USD. Suppose that

On 2020-03-31, MRK traded for 75.9563 USD. In one month, MRK can either go up to 83.55 USD or down to 68.36 USD. Suppose that on 2020-03-31, you went long a 74.58 USD put. What was the option premium that you paid or received? The risk-free rate is 0.1%.

For your own understanding, compare your answer to your answer in the previous problem. Which premium is larger? Why?

Previous Question: On 2020-03-31, MRK traded for 75.9563 USD. In one month, MRK can either go up to 83.55 USD or down to 68.36 USD. Suppose that on 2020-03-31, you went long a 74.58 USD call. What was the option premium that you paid or received? The risk-free rate is 0.1%.

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