which one do we use to calculate value of put option?
i) Pe N(-d2) e-rt - Pa N(-d1) (black scholes)
or
ii) c - Pa + Pe e-rt (put call parity)
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put option formula
12y ago#1The formula sheet only gives the put call parity formula and so normally you would be expected to use this.
The only time you would use the other formula in the exam would be if the requirements actually gave it to you (you are certainly not expected to learn it). From memory this has only happened once, but if you are given this formula in the requirements then certainly do use it.
So will these two methods give us the same answer?
12y ago#3Yes, but for heavens sake don't waste time in the exam (and don't go learning the formula either!).
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