Question

QUESTION 10 A put option expires $6 in the money, meaning that the option's payoff is $6. What is the payoff at expiration of the "corresponding" call option; that is, a call option with the exact same parameter values as the put option?

Answer 1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS $0

Put option expires in the money when the share price at the expiration is less than the exercise price while Call option expires in the money when the share price at the expiration is more then the exercise price.

In the given case, the put option has a payoff of $6, which means that expiration price of the share is less than exercise price, which will make the corresponding call option out of the money.

Hence, the corresponding call option will have $0 payoff.

I hope this solves your doubt.

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