Hsbc put option price with strike price

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Reference no: EM131905749

Suppose you are an option trader and are now considering the options on the shares of HSBC.

The HSBC share price and its January futures price closed at $58.3 and $58.5 on 3 January 2017, respectively. The HSBC January call option price was $3 with a strike price $60 on 3 January 2017. The call and put options are of European style. The Hong Kong Interbank Offer Rate was 0.3% per annum with continuous compounding.

Required:

a Calculate the HSBC January put option price with a strike price $60 using the put-call parity.

b Determine the arbitrage profit if the market price of the put option is $5 by the end of January. Show your steps.

c Calculate the HSBC January put option price with a strike price $60 using the put-call-futures parity.

Reference no: EM131905749

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