Which one of the following situations will produce the highest put price, all else constant? Assume the options are all in the money.
A)$50 stock price; 60 days to option expiration
B)$50 stock price; 90 days to option expiration
C)$55 stock price; 60 days to option expiration
D)$55 stock price; 90 days to option expiration
E)Insufficient information is provided to answer this question.

Question

Quizplus · Accepted Answer

The value of a put option increases with the time to expiration due to the time value of money. Among the options given, the one with the longest time to expiration (90 days) and the lower stock price ($50, making the option more in the money) will have the highest put price. Therefore, option B is correct.

Which One of the Following Situations Will Produce the Highest