Which of the following will produce the highest put price, all else constant? Assume that the options are all in-the-money.
A) $30 stock price; 60 days to option expiration.
B) $35 stock price; 60 days to option expiration.
C) $30 stock price; 30 days to option expiration.
D) $35 stock price; 30 days to option expiration.
E) Undetermined due to insufficient information.

Question

Quizplus · Accepted Answer

A higher put price is generally associated with a lower stock price when the option is in-the-money, as the value of the put increases when the underlying stock price decreases. Additionally, a longer time to expiration increases the option's value due to the higher uncertainty and more time for the stock price to move. Therefore, option A, with the lowest stock price and longest time to expiration, will produce the highest put price.

Which of the Following Will Produce the Highest Put Price