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An option of the European variety is one that can only be exercised at maturity. An American style option, on the other hand, can be exercised anytime prior to the maturity date. The American style option is slightly more valuable than the European one, but everything else is the same.
Pay attention to the fact that this option is already worth $6.
What is the cost of a European call option on a stock that doesn't pay dividends?
A European call option with a $50 strike price on a non-dividend-paying stock costs $6.The stock price is $51, the time until maturity is one year, the continuously compounded risk-free rate for all maturities is 6%, and the price of the stock is $51.
What is the cost of a $30 strike European put option with a six-month expiration date?
The exchange technique is the accompanying: buy a put option and short one stock.5.A European call with a strike price of $30 and a six-month expiration date costs $2.The price of the underlying stock is $29, and two and five-month dividends of $0.50 are anticipated.
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