A Call and a Put on a Stock Have the Same

question 8

Short Answer

A call and a put on a stock have the same strike price and time to maturity. At 10:00am on a certain day, the price of the call is $3 and the price of the put is $4. At 10:01am, news reaches the market that has no effect on the stock price or interest rates, but increases volatilities. As a result, the price of the call changes to $4.50. What would you expect the price of the put to change to? _ _ _ _ _ _

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Definitions:

Metaphor Analysis

A qualitative research technique used to explore how metaphors in language reflect complex ideas, beliefs, and cognitive processes.

Root Metaphors

Fundamental underlying metaphors that shape how individuals or cultures understand the world.

Discourse Analysis

A research method focusing on the use of language in texts or spoken words to explore how language constructs social, political, and cultural realities.

Coding

The process of categorizing or assigning codes to data for analysis, often used in qualitative research to identify patterns or themes.