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157
16.A trader buys a call and sells a put with the same strike price and maturity date. What is the position equivalent to?
A.A long forward
B.A short forward
C.Buying the asset
D.None of the above
A.A long forward
B.A short forward
C.Buying the asset
D.None of the above
Answer: A
From adding up the two payoffs we see that A is true: max(ST−K,0)−max(K−ST,0)= ST−K
From adding up the two payoffs we see that A is true: max(ST−K,0)−max(K−ST,0)= ST−K
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015