You find a call and a put with the same strike price and exercise date. The price of the put is greater than the price of the call. You know that:
A) the call is in-the-money.
B) the stock price is equal to the strike price.
C) the put is in-the-money.
D) one of the options is mis-priced since it is impossible for the call price to be equal to the put price.
E) Insufficient information.

Question

Quizplus · Accepted Answer

If the price of the put is greater than the price of the call with the same strike price and exercise date, then the put is in-the-money while the call is out-of-the-money. Therefore, the stock price must be below the strike price, making the put option valuable while the call option is worthless.

You Find a Call and a Put with the Same