THE TICKET IS AAPL NOT APPL why is it unclear? This is the puts close price is $
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Question
THE TICKET IS AAPL NOT APPL
why is it unclear?
This is the puts close price is $170 at the moment.
This is CALL option, close price 170 at the moment
2. 1. Determine if Apple's put/call parity holds. Go to yahoo finance. Enter APPL in ticker search box. Click on options. Find the date that is closes to one year from today. 2. Find the call and put premium for a strike price that is close to Apple's current price. 3. Find the yield on a one year Treasury bill. 4. Determine if the put/call parity holds using the equation ·C call option price, ·P = put option price, ·S = the current stock price, ·x-the strike price at maturity, ·r = the risk-free interest rate, · t = the time to maturity,Explanation / Answer
CMP (S) as on 4th December = ~$170 (actually $ 169.80)
Risk Free Rate (prevailing in market US 1 year treasury bond yield) (r) = 1.656% p.a.
Call Price for strike of 170 = 1.80
Call Price for strike of 170 = 1.88
Tenure (t) = 4 days = 4/365 = 0.011 years
According to put-call parity,
C + X / (1+r)^t = P + S
1.80+170/(1+0.01656)^0.011 = 1.88 + 169.80
1.80+169.97 = 1.88+169.80
171.77 = 171.68
(It wont match exactly, but should always match approximately with difference upto 20-30 cents).
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