Question
You own one call option and one put option on Marathon Oil. The stock price of Marathon is 130, while the strike price of your
You own one call option and one put option on Marathon Oil. The stock price of Marathon is 130, while the strike price of your options is 140. The interest rate is 5 percent, and the standard deviation of Marathon is 30 percent. Perhaps unfortunately, you dont know the time to expiration of your options, though you know they are the same for both of them. Graph the value of each of these options (so youll have 2 lines) as the time to expiration goes from 1.5 years to today.You will want to graph this in negative time. So you will want the left hand side of your x-axis to equal -1.5 and the right hand side to equal 0. Youll also want to substitute a time to expiration of 0.001 for a time of 0.
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