Q) If an underlying asset’s price is less than a related option’s strike price at expiration, a protective put position on that asset versus a fiduciary call position has a value that is:
- lower.
- the same.
- higher.
Not able to comprehend this one. Can anyone help?
Thanks.
the question is asking about the value of protective put and fiduciary call. it means the put call parity and hence the answer is b
Value of fiduciary call position = protective put in put call parity theory , this relation is unaffected by change in price of underlying , hence answer is B