Question: Calculate the put premium according to put - call parity which gives no arbitrage opportunity. Explain what transaction would you do if the put premium

Calculate the put premium according to put-call parity which gives no arbitrage opportunity. Explain what transaction would you do if the put premium is below/above the put premium you calculated.


European call option premium: c = $3

Stockpricetoday: S0= $31

Life of option: T=0.25

Risk-free rate for maturity T with continuous compounding: r= 10%

Strike price: K= $30.

No dividends paid during life of option

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