We all know that trading options is exciting, highly competitive, and can be very profitable. The key to long term and consistent profits in option trading is options education. The McMillan Mentoring Program, which is run by former Market Maker, white badge AMEX Floor Official, professional trader, and longtime MENSA member Stan Freifeld, can take your trading to the next level* To see where you stand, take Stan’s Options Challenge by answering his question on the first Monday of each month. Good luck!
Stan’s Options Challenge: Question #3
XYZ stock is trading at $102 and the Feb 100 Call with 3 months until expiration is trading at $8.50. The stock does not pay a dividend and the risk free rate is 6%. To the nearest nickel, where should the Feb 100 Put be trading?:
A) $4.25
B) $5.00
C) $6.00
D) $7.25
E) $8.50
Email your answers to stan@optionstrategist.com or call Stan at (973) 362-4558 to discuss the mentoring program.
*Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
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