Simple arbitrage, Financial Management

Simple Arbitrage

The easiest arbitrage opportunities in the option market exist when options violate simple pricing bounds. No option, for example, should sell for less than its exercise value.

With a call option: Value of call > Value of Underlying Asset - Strike Price

With a put option: Value of put > Strike Price - Worth of Underlying Asset

 

 

Posted Date: 7/25/2012 7:26:03 AM | Location : United States







Related Discussions:- Simple arbitrage, Assignment Help, Ask Question on Simple arbitrage, Get Answer, Expert's Help, Simple arbitrage Discussions

Write discussion on Simple arbitrage
Your posts are moderated
Related Questions
Explain the Basis Risk Basis risk considers to the floating rates of two counterparties being pegged to two dissimilar indices.  In this situation, as the indexes are not compl


Problem: i) Assume a firm buys a new tooling machine for Rs 2000,000, installation costs net of taxes are Rs 300,000. An existing asset has a book value of Rs 400,000 and the

a)   Write short note - 1) P V Ratio 2) Margin of Safety   3) Material Variances 4) Absorption Costing b)  Describe the meaning of the term 'variance an

Companies with rapidly growing levels of sales do not need to worry about raising funds from outside the firm.  Do you agree or disagree with this statement?  Explain. Disagree

Group Activity An example of a budget can be seen below. After viewing the budget, identify the possible reasons for the variations. Budget - Jul / Dec 200X


Explain the risk–return relationship The relationship among the risk and required rate of return is termed as the risk–return relationship.  It is a positive relationship since t

How to use integrated promotional mix to achieve marketing objectives

Table 1:  Politics Stability of the existing government structure National/provincial government r