A client of a large investment bank is interested in purchasing a European call option for a certain stock that provides him with the right to purchase the stock at a fixed price 12 weeks from today. The client then would exercise this option in 12 weeks only if this fixed price is less than the market price of the stock at that time. The bank now needs to determine what price should be charged for the call option. This price should be the mean value of the option in 12 weeks. Based on a random walk model of how a stock price evolves from week to week, simulation is to be used to estimate this mean value. To start, the various elementsof a simulation model need to be carefully formulated.