Question
Suppose that there are two options on the same stock. One is a European call option with a strike price of K and maturity T,
Suppose that there are two options on the same stock. One is a European call option with a strike price of K and maturity T, and the other is a European put option with the same strike price and maturity.
a)An investor sells the European call option and buys the European put option.Describe the investor's position.
b)How does your answer in a) change if the investor buys the European call option and sells the European put option?
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Entrepreneurial Finance
Authors: J . chris leach, Ronald w. melicher
4th edition
538478152, 978-0538478151
