Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Call-Put Parity
P + S = C + E * [1/(1+i)] ^n where:
P = the market price of the put S = the market price of the stock C = the market price of the call E = the exercise price of both the call and the put i = the risk free rate ( taken as 5.5 %) n = the number of years until the expiration date of the options
Thus, if P + S > C + E * [1/(1+i)] ^n, you should buy calls because their value must increase for the equation to balance.
On the other hand if P + S < C + E * [1/(1+i)] ^n, you should buy puts.
For Example -
For the March series, we find Call Option should be purchased for strike prices of Rs. 720 and 740.
Strike Price
Difference
720
18.19
740
5.74
For the March series, we find Put Option should be purchased for strike prices of Rs. 760, 780, 800, 820, 840, 860, 880 and 900.
760
15.3
780
4.25
800
4.89
820
2.1
840
3.79
860
4.84
880
9.79
900
32.64
Definition of 'Working Capital Turnover': A calculation comparing the depletion of working capital to the generation of sales over a provided period. This provides some useful
Capital Asset Pricing Model (CAPM) Capital Asset Pricing Model (CAPM) is a model which utilizes the measure of systematic risk, 'B' to price assets. The expected rate of r
Average of Relatives Method We have seen the construction of an index number using the aggregates method. In this section, we shall see the construction of an index using the
We have earlier studied that the investor may have to carry cash for some time because of discrepancies arising between the timing of the bond's cash-flow and the
Types of Efficiency Efficient market theory can be described in three ways: 1) Allocative Efficiency: A market is allocatively proficient when it directs savings tow
What are the main elements of capital budgeting decisions There are three elements of capital budgeting decisions (i) long-term assets and their composition (ii) business
Once capital markets are integrated, it is hard for a country to maintain a fixed exchange rate. Explain why this may be so. Answer: one time capital markets are integrated int
High-yield bonds are issued by organizations that do not qualify for "investment-grade" ratings by any one of the leading credit rating agencies
International mortgage-backed securities are the mortgage-backed securities that are issued in a country by a non-domestic entity. With limited size of the Indian
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd