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Blogs Recent Entries Best Entries Best Blogs Blog List Search Blogs. What's the pricing formula for Chooser Option. To me it's a call option minus a put option, but I have a timing problem Yes, timing is the tough part for this type.

I'll try to spell it out in the attempt that it will cement this in my head, and benefit you at the same time. Once again, there are three times that are important 0,t,T At time t you get the better of a call with expiration time T-t and a out with expiration time T-t. Which is MAX[Call, Put]. So you should be able to recognize this as the price of a CALL with expiration T-t plus the price of a PUT with expiration T-t.

Now here is the tricky part.

The Half View Public Profile Find all posts by The Half. Your explanation is so so clear Originally Posted by The Half.

Originally Posted by merrycherub. I was out for grocery shopping.. Store some food for my last preliminary exam ReAct View Public Profile Find all posts by ReAct.

Understanding Put-Call Parity | The Options & Futures Guide

Redwoody, I believe the equation you have proposed is correct for the option at time t. Lavender, I understand your point, but I think we're thinking about it differently. There must be enough information given to deduce the value of this option. I think thatis what you are referring to when you speak of further discounting. But we already know how to find the value of ANY put option with given strike and time to expiry.

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Chooser option - Wikipedia

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Find all posts by merrycherub. Arizona State University Posts: Find all posts by The Half. Originally Posted by The Half Yes, timing is the tough part for this type.

Put-Call Parity

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