Question: The table below gives prices for Apple (AAPL) options on April 10, 2020. The option with exercise price X = $270 is assumed to be

The table below gives prices for Apple (AAPL) options on April 10, 2020. The option with exercise price X = $270 is assumed to be the at-the-money option. 1 A B C D E F APPLE (AAPL) OPTIONS 268 2

a. Compute the implied volatility of each option (use the functions CallVolatility and PutVolatility defined in the chapter or the equivalent R code).

b. Graph these volatilities. Is there a volatility “smile”?

1 A B C D E F APPLE (AAPL) OPTIONS 268 2 Stock price 3 Current date 10-Apr-20 4 Expiration date 18-Sep-20 5 Time to maturity, T 6 Interest 7 0.440

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