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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
Question: (a) A stock currently sells for $80 and a put option with an exercise price of $80 currently sells for $2. Find the percentage gain to an investor in the common stock
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