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QUESTION

Case 1: Should you early exercise the following American-style put option? If not always, under what situation would you early exercise?

    • Case 1: Should you early exercise the following American-style put option? If not always, under what situation would you early exercise?

Stock price = $2Exercise price = $50Time to maturity = 6 months

    • Case 2: Should you early exercise the following American-style call option? If not always, under what situation would you early exercise?

Stock price = $77Exercise price = $75Dividend amount = $0.50Ex-dividend = tomorrowTime to maturity = 2 months

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