Hi. Can someone explain this to me? Why does the minimum value have a max in it?
The minimum value of a European call option is max [, S − X / (1 + R)T].
Thanks!
Hi. Can someone explain this to me? Why does the minimum value have a max in it?
The minimum value of a European call option is max [, S − X / (1 + R)T].
Thanks!
Because the value cannot be less than zero. The value is the Max of (0, or S-X/(1+R)t).
If S-X/(1+R)t is less than 0, then the value is 0
Agree with villnius