Suppose an American call and put on AAPL stocks has an exercise price of $120 on December 8, 2014. The put expires in 225 days (i.e., the time to expiration T = 225/365 = .6164). Suppose the appropriate risk-free rate is 0.01 percent (i.e., r = .001).
(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 $114, 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).