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Which option should have the highest market price

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The price today of MMM stock is $ 40. Consider the following three options. Again remember that Option Price can be viewed as the sum of Payoff Value + some amount due to time to expiration.

XX - a PUT that expires in 3 weeks and has a $ 45 exercise price

YY - a PUT that expires in 7 weeks and has a $ 50 exercise price

ZZ - a CALL that expires in 3 weeks and has a $ 30 exercise price

(a) Which option should have the HIGHEST Market Price?

(b) Which option should have the LOWEST Market Price?

Reference no: EM132373618

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