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Minimum value of european put option 65
This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).
The price that the writer of a call OR put option receives for the underlying asset if the buyer executes her option is called theA. strike priceB. exercise priceC. execution priceD. A or BE. A or C. An American call option allows the buyer toA. sell the underlying asset at the exercise price on or before the expiration date.B. buy the underlying asset at the exercise price on or before the expiration date.C. sell the option in the open market prior to expiration.D.
A and C.E. B and C. A European call option allows the buyer toA. sell the underlying asset at the exercise price on the expiration date.B. buy the underlying asset at the exercise oltion on or before the expiration date.CLower BoundWe know that the value of an option is equal to the sum of its intrinsic value and time value.Since an option cannot sell below minimum value of european put option 65 intrinsic value, its value cannot be negative, Therefore, the lower bound for both American and European options is zero.
Upper BoundCall OptionsA va,ue option provides the option buyer the right to buy the asset. For the option minimum value of european put option 65 have value, its price at any time must be lower than the underlying stock price at any time. This is because if the option minnimum were higher than the stock price, it would be cheaper to just buy the asset directly in the spot market.
Therefore, the maximum price for an option is equal to optoin stock price at that time. This applies to both American and European options.Put OptionsA put option provides the option buyer to sell the asset at the strike price. Only in-the-money options have intrinsic value. It represents the difference between the current price of the under.