Question

You are researching a stock currently priced at $35 per share. Call options are currently priced at $3.00, and puts are priced at $2.00. You use Black-Scholes and put-call parity to determine that calls are fairly priced, but the puts should be priced at $1.00. What would be TRUE given this information

Answer 1

For a profit with little risk, you should short the puts.

What does "stock" mean?

• A stock is a colloquial phrase for any company's ownership certificates. On the other hand, a share alludes to a certain company's stock certificate.
• You become a shareholder if you possess shares of a specific corporation.
• There are two categories of stocks: ordinary and preferred.

A stock example is what?

Stock refers to a portion of a company's ownership. 100 shares of the Disney Corporation are an illustration of stock.

What exactly is a stock example?

Low risk investments are by definition safer than comparable ones. In comparison to options, stocks carry less risk. The right is the predetermined ability to acquire or sell an item at a predetermined price on a specific date.

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