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Accounting/Finance Question re: Options? |
Why are options with identical exercise prices and maturity dates, are written on stocks with identical prices, selling for different prices? Do options on one of these 2 stocks provide investors with superior investment opportunities in comparison to the other? I already answered this question. I saw Muncie's answer and he is a topanswerer in investing though I feel his answer is all that right. Stock betas do differ but even Black & Scholes when applies beta into their equation usually come out with the price as the difference between the Exercise price and todays price time e^(krf x t) which I explained earlier. So even if the betas are different, but the stock price, the exercise price and time to maturity is identical for both they will have identical prices. This is a very hypothetical situation and any difference is due to supply and demand. Of course if the stocks have differnet betas it is more than usuall that their prices are different and then this situation you describe is very unlikely to happen. If you want to go into excursions then only you need to worry about this which is valueless thinking. |
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