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Put-Call Parity: What is the value of a put option written on the stock with the same exercise price and expiration date as the call option?

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The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with an exercise price of $32 and one-year until expiration has a current value of $6.56.

What is the value of a put option written on the stock with the same exercise price and expiration date as the call option?

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Solution Preview

The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with an exercise price of $32 and one-year until expiration has a current value of ...

Solution Summary

The value of a put option is calculated using put-call parity.

$2.19