I'm helping a friend here with one of his MBA derivatives questions so maybe you guys can shed some light on what I can't. A European call option and put option on a stock both have a strike price of $20 and an expiration dates in 3 months. Both sell for $3. The risk-free interest rate is 10% per annum, the current stock price is $19, and a $1 dividend is expected in one month. Identify the arbitrage opportunity open to a trader. My inclination is to buy the put and sell the call but I feel likes there's something I should so with the stock? Any help would be great!