What is the relationship between put option price and risk free rate? And between call options price and risk free rate? Explain the logic? No calculation.


closed as unclear what you're asking by Bob Jansen Oct 12 '15 at 18:52

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    $\begingroup$ Cross-posted to economics, please note cross-posting is not allowed. $\endgroup$ – Bob Jansen Oct 12 '15 at 18:55
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    $\begingroup$ As a general rule, in a high interest rate environment it is advantageous to postpone payments and disadvantageous to postpone receipts. Therefore a call option (option to buy and pay later) increases in value when interest rates rise, while a put option (option to sell and receive payment later) decreases in value as interest rates rise. $\endgroup$ – noob2 Oct 12 '15 at 19:23
  • $\begingroup$ As you can see here en.wikipedia.org/wiki/… the RHO of a European call is positive, while the RHO of a European put is negative. $\endgroup$ – Alex C Oct 13 '15 at 2:28