I am having a tough time conceptualizing this question here: Let $P$= Price of European Option, $S$ = Present Price of Option and $K$ = Strike Price. If $P > K$, why does abritrage exist? Assuming $r = 0$. I really can't figure this out.
I understand that when C(call option) is greater then S abritrage exists because $C - S + K > 0$ and even if you don't execute the option, $C - S > 0$.
Could the same logic be utilized here?