If price of call reduces, then it is also to be the case when underlying price should also reduce & in such case why we are investing in spot price?
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This question is related to cash & carry arbitrage.
Call is priced higher than what binomial model predicts so there’s a clear cut arbitrage opportunity here.
We borrow at Rf & with that funds we buy the underlying.
We sell a call option for which we get upfront premium.
This way we eliminate arbitrage opportunity.