Step 1: Understanding Faraday's Law.
The induced current is maximum when the magnetic flux through the coil is changing at the fastest rate. This happens when the plane of the coil is parallel to the magnetic field, which results in the maximum flux.
Step 2: Conclusion.
Thus, the correct answer is option (D).
Final Answer:
\[
\boxed{\text{(D) parallel to the magnetic field}}
\]