Suppose that the Forward price of the ABC stock is 100. A call option on ABC
with exercise price 100 is trading at $24 and a put option with the same
exercise price is trading at $18. All are with the same maturity and the
company does not pay any dividends. Is there an arbitrage opportunity and if
so, how can you profit from it?

Answer rating: 100% (QA)

Yes in this scenario there is an arbitrage opportunity due to a violation of putcall parity Putcall ... View the full answer