Identify the arbitrage opportunity

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A European call option and put option on a stock both have a strike price of 20 dollars and an expiration date of 3 months. Both sell for 3 dollars. The risk free rate for all maturities is 10% per year continuously compounded and remains unchanged over time. The current stock price is 19 dollars. A one dollar dividend is expected in one month. Identify the arbitrage opportunity open to a trader and provide the exact details of generating the quantity. Be very specific showing the exact trading strategy.

Reference no: EM132722319

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