Which one of the following situations will produce the highest put price, all else constant? Assume the options are all in the money.
A)$15 strike price; 45 days to option expiration
B)$15 strike price; 60 days to option expiration
C)$20 strike price; 45 days to option expiration
D)$20 strike price; 60 days to option expiration
E)Insufficient information is provided to answer this question.

Question

Quizplus · Accepted Answer

The longer the time to expiration, the higher the option price due to the additional time value. Additionally, the higher the strike price, the higher the put price because there is a greater chance the stock will fall below the higher strike price. Therefore, the combination of a $20 strike price and 60 days to expiration will produce the highest put price.

Which One of the Following Situations Will Produce the Highest