Again assume that the price of Socrates Motors stock will either rise to $50 or fall to

Question:

Again assume that the price of Socrates Motors stock will either rise to $50 or fall to $35 in one month and that the risk-free rate for one month is 1.5 percent. How much is an option with a of $40 worth if the current stock price is $45 instead of $40?

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.