# Call option value bounds

Afucfa - the expected cash flows do not have anything to do with time value. Theoretical lower bound for in the money European put: If the expected cash flows of the underlying increase before the excersise date then the value will go down because the time value of the option will go down.

Hope this is correct and all makes sense. Theoretical lower bound for an in the money European call: I now have

Effectively this is the time-value of the option Call option value bounds does this not apply to the American puts? Never say Die https: If expected cash flows increase, say by an increase in dividends, the market will price this new higher cash flow into the call option by decreasing its value. Effectively this is the time-value of the option. Theoretical lower bound for an in the money European call:

So this is the minimum price any one would sell it to you. Theoretical lower bound for in the money European put: If the expected cash flows of the underlying increase before call option value bounds excersise date then the value will go down because the time value of the option will go down.

I have doubt Is an euro put with longer duration vs euro call option value bounds of horter duration? So this is the minimum price any one would sell it to you. Since you are selling it at time t in the future, you have to discount that cash flow by t.

Hope this is correct and all makes sense. I now have But you could buy the underlying immediatly to lock in that profit, so S does not need to be discounted.