What would be the maximum value of the put

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Reference no: EM132001858

Suppose an American call and put on AAPL stocks has an exercise price of $670 on October 1, 2012. The put expires in 82 days (i.e., the time to expiration T = 82/365 = .2247). Suppose the appropriate risk-free rate is 0.14 percent (i.e., r = .0014).

(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 $650, 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: EM132001858

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