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
Imagine you have been allocated $100,000 which is to be invested in 8 companies listed on the Australian Stock Exchange (ASX). You are required to have a balanced portfolio betwee

All treasury securities are issued on the basis of auction. The auction process is computerized and hence qualified broker-dealers can access it electronically. T

limitations of using a periodic inventory system

Define country risk. How is it different from political risk? Country risk is a broader quantify of risk as compared to the political risk, as the former encompasses political ri

explain the concept of working capital.what are the factors which influence the working capital?

what is leverage

give and explain the seven sources of finance

Q. Define Implicit cost and explicit costs? Implicit cost and explicit costs: the implicit cost is the rate of return associated with the best invests opportunity for the firm

Describe the duties of the financial manager in a business firm? Financial managers evaluate the firm's performance, determine what are the financial consequence will be if the

What are the benefits and drawbacks of financial hedging of the firm’s operating exposure vis-a-vis operational hedges (like relocating manufacturing site)? Answer:  Financial he