FREE Trial

What is the value of a put option if the underlying stock price is $83, the strike

Question:

What is the value of a put option if the underlying stock price is $83, the strike price is $80, the underlying stock volatility is 47 percent, and the risk-free rate is 5 percent? Assume the option has 140 days to expiration.


Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 59% (27 reviews)

d 1 3379 d 2 3379 47 0468 The standard normal pr...View the full answer


answer-question-section
Answered By
tutor-profile-image
Vineet Kumar Yadav
I am a biotech engineer and cleared jee exam 2 times and also i am a math tutor. topper comunity , chegg India, vedantu doubt expert( solving doubt for iit jee student on the online doubt solving app in live chat with student)
5.00+ 2+ Reviews 10+ Question Solved
Related Book For  book-img-for-question
Fundamentals of Investments Valuation and Management

Fundamentals of Investments Valuation and Management

ISBN: 978-0077283292

5th edition

Authors: Bradford D. Jordan, Thomas W. Miller

See More Books
Question Posted:
See More Questions

Related Video

A put option is a financial contract that gives the owner the right, but not the obligation, to sell an underlying asset, such as a stock or a commodity, at a predetermined price, known as the strike price, on or before a specific date, known as the expiration date. Put options are used by investors as a form of insurance against a decline in the value of the underlying asset. If an investor expects the value of an asset to fall in the future, they can purchase a put option on that asset. If the value of the asset does fall, the put option will increase in value, allowing the investor to sell the asset at the higher strike price. For example, if an investor owns 100 shares of a stock that is currently trading at $50 per share, they may purchase a put option with a strike price of $45 and an expiration date three months in the future. If the stock price falls to $40 before the expiration date, the investor can exercise the put option and sell their shares for $45 each, even though the market price is only $40. This would allow the investor to limit their losses. It\'s important to note that purchasing a put option involves paying a premium to the seller of the option, and the investor can lose the entire premium if the price of the underlying asset does not decline as expected. Put options are just one type of financial derivative and should only be used by experienced investors who understand the risks involved.

Students also viewed these Accounting questions

Dynamics Of Wave Packets In Molecular And Nuclear Physics Proceedings Of The International Meeting Held In Priorij Corsendonck Belgium July 2 4 1985 1st Edition - ISBN: 3540167722 - Free Book