If options are fairly priced, then the following equation applies:

call price + strike price - stock price - put price + dividend - carrying cost = 0

If this equation is not satisfied, then conversion arbitrage resulting in risk-free profit is possible. Assuming risk-free profit cannot be realized, this equation can be used to determine the implied dividend based on current option prices.

**Instructions***Stock Price*- enter the stock price associated with the option price
*Strike Price*- enter option strike price. It is best to use deep in-the-money puts - that is, a strike significantly above current stock price.
*Call Option Price*- enter the call option price associated with the strike price
*Put Option Price*- enter the put option price associated with the strike price
*Days to Expiration*- enter number of days to option expiration or click on the calendar and specify the option expiration date. If you use the calendar, Days to Expiration will be calculated and entered by the program
*Interest Rate*- enter the current risk free interest rate as a percentage
*Get Symbol*- if you need stock and option data, enter a stock symbol here and a pop up window will appear containing current stock and option prices

Options Trading About Us Option Trading Directory Option Trading Books Black Scholes Option Greeks Calculator Cox-Ross-Rubenstein Option Greeks Calculator Option Price Calculator Implied Dividend Monte Carlo Option Probability Calculator Option Position Calculator Covered Calls Calculator

Stock Option Volatility Trading

A service of Trotter Trading Systems

Tuesday, Oct 17, 2017