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    European-style contracts

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    Determine whether the $2.45 difference in the market prices between the call and put options is consistent with the put-call parity relationship for European-style contracts.

    © BrainMass Inc. brainmass.com October 10, 2019, 4:04 am ad1c9bdddf
    https://brainmass.com/business/options/european-style-contracts-447836

    Solution Preview

    Hi, find attached solution to your question.

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    In options, we have two option style types, namely:
    ? European - Style Option and
    ? American - Style Option
    A European - Style option is an option that can only be exercised on the expiration date. American - Style option on the other hand can be exercised at any time up to the expiration date of the option. Most of the options that are traded on the exchanges are American. However, European options are ...

    Solution Summary

    The expert determines whether the $2.45 difference in the market prices between the call and put options is consistent with the put-call parity relationships for European-style contracts.

    $2.19