Put Option Value

[Daniel1985]

Current Stock Price: 70
Exercise Price of CALL options: 72
CALL option premium: 5.50
RFR = 6%

Given the options are european options and expire in 6 month, the value of a PUT option with excercise price of 5.20 is closest to:

5.43
3.50
1.49

……I don't know if I missed something here completely. I can calculate the value of the put option given the exercise price of the put, the RFR and the stock price. Then I would come up with 0; -0.07 -> 0 cent

Why do I add the CALL option premium to the -0.07 cent and come up with 5.43?!?

Can someone help me out here?

 

[lankylint]

Value of Call + Discounted Strike price = Value of Put + Stock price
5.5 + 72 * exp(-0.06 * 0.5) = Value of put + 70
5.5 + 69.87 - 70 = value of put
This is put call parity.
Edit: How can the exercise price be different for the put? The question must be misquoted. Put call parity requires the exercise price to be the same.

 

[Deimon]

>> I can calculate the value of the put option given the exercise price of the put, the RFR and the stock price
No, you can’t. The formula you are referring to gives you the minimum option price. Not the actual price.
And btw - yes, check the strike of the put option.

 

[Daniel1985]

Duh…thanks!
Of course the “put call parity” is right. The excercise P of the Put is the same as the Call (forgot to mention)
Thanks!