Assume that the CCIR is 4%. The spot price of the underlying assets for each option below is $15.

A Put option with expiration in 12 months from now and strike price $5 (per share) is currently trading at $4.9. Is there a mispricing. If so, specify how you would exploit it.
A Call option with expiration in 12 months from now and strike price $5 (per share) is currently trading at $0. Is there a mispricing. If so, specify how you would exploit it.

Answer rating: 100% (QA)

Answer Yes there is mis pr icing in both options For the Put option the intrinsic value ... View the full answer