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What would be the maximum value of the put

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Reference no: EM131558723

Suppose an American call and put on AAPL stocks has an exercise price of $120 on December 8, 2014. The put expires in 225 days (i.e., the time to expiration T = 225/365 = .6164). Suppose the appropriate risk-free rate is 0.01 percent (i.e., r = .001).

(1) What would be the maximum value of the put? (Hint: Consider when the put value is maximized)

(2) If the current stock price is $114, what is the moneyness of the call option (i.e., ITM, ATM, OTM)?

(3) If the current stock price is $650, what is the moneyness of the put option (i.e., ITM, ATM, OTM).

Reference no: EM131558723

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