According to the question, option 1, which has a 1 year maturity and 0.2 volatility, has the put option with the lowest stock price.
Investors acquire stock at a par value classified based on the market's current circumstances. If the price rises, cash by selling a company for a profit. Investors might well be selling at such a loss if the price falls.
When comparing the years, the premium cost rises as the remaining years till maturity do as well. We must raise the stock spot price through order to maintain the put option premium. As a result, in the case of options 3 and 4, the stock's current price must be excessive.
Plans 1 , 2, which both have a maturity of one year, are comparable but differ in terms of premium price and volatility. The Black Scholes model predicts that the option premium will rise as volatility rises. The spot price of the stock needs to be high in order to maintain the risk premium of the Put with the rise in volatility. As a result, the stock price of option 2 must be greater than that of option 1.
Option 1, a 1 year mature option with 0.2 volatility, has the put option with the lowest stock price. Thus, it is revealed that the lowest stock price exists.
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