Question: question 2. Why doesnt put-call parity hold for American options? Construct a portfolio that would have this payoff diagram: Note that the horizontal line at

question 2. Why doesnt put-call parity hold for American options? Construct a portfolio that would have this payoff diagram:

question 2. Why doesnt put-call parity hold for American options? Construct a

Note that the horizontal line at $15 continues to the right indefinitely and does not stop when the stock price is $50.

$45 $40 $35 $30 $25 D $20 2 $15 $10 So So $10 $20 $30 $40 $50 $60 Stock price Note that the horizontal line at $15 continues to the right indefinitely and does not stop when the stock price is $50

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