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You want to buy an American Put on Apple (AAPL) with a strike price of $290....

You want to buy an American Put on Apple (AAPL) with a strike price of $290. Apple is currently trading for $282.12, has a u of 1.13, and a d of 0.88. The risk free rate is 1% per period. Use a two period binomial model. What is the most you should pay for that put? Note: Answer in dollars per share, round to the nearest penny.  

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Answer #1

Solution.>

The value of the American put option is $22.139

I have solved it in Excel. The formula used are written in the column along with the values. If you still have any doubt, kindly ask in the comment section.

The formula used are:

Note: Give it a thumbs up if it helps! Thanks in advance!

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