|
- UID
- 223295
- 帖子
- 246
- 主题
- 96
- 注册时间
- 2011-7-11
- 最后登录
- 2013-8-21
|
2#
发表于 2011-7-13 16:16
| 只看该作者
I understand why you are saying Max (0,St-X) as against (0, St - X(1+RFR) ^T-t for mimimum value of AMERICAN Call Option, because you are thinking an AMERICAN Option can be exercised any time during the strike period.
But, take it this way. Given that you can buy a stock at a FIXED price of $30, either today or 3 months from now. What would you choose? You would rather choose to buy it 3 months from now. Because, you would rather keep that money with you and earn some interest. That is why, even though you have a choice of buying it today, you will postpone it till the maximum allowed time.
The general explanation is, when you have to SPEND money (on a non-consumable item), you would rather spend it LATER than sooner and when you have to GET money, you would rather get it SOONER than later.
Hope this clarifies. |
|
