Consider Three Put Options at Strikes 40,50,and 60

question 7

Multiple Choice

Consider three put options at strikes 40,50,and 60.The price of the 40-strike option is $4 and the price of the 60-strike option is $8.Which of the following statements is most accurate? (Assume all options have the same maturity. )

• A)The price of the 50-strike put is less than $10.
• B)The price of the 50-strike put is less than $6.
• C)The price of the 50-strike put is greater than $6.
• D)The price of the 50-strike put is greater than $7.

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