A stock price is currently \(\$ 40\). It is known that, in one month, the price will be either \(\$ 42\) or \(\$ 38\). The annual risk-free interest rate is \(8 \%\), with continuous compounding. What is the value of a one-month European call option with a strike price of \(\$ 39\) ? How many stock shares should a writer hold in order to hedge risk? Repeat in the case of a put option, and check the working of the hedge in detail.