10. If the example in Section 10.6 is a pared down version of a European call, describe a similar digital option which represents a pared down put. Price it, and formulate a digital version of put-call parity com- paring the price of these two derivatives.

Example from section 10.6:

Please explain work! thank you!

In general if we take any derivative whose payoff at time T is given by g(Sr), where g(x) is some function, then as we saw in the last section, the price h today of this derivative is given by dz 083 We will use this formula to compute the value of the digital option. In general if we take any derivative whose payoff at time T is given by g(Sr), where g(x) is some function, then as we saw in the last section, the price h today of this derivative is given by dz 083 We will use this formula to compute the value of the digital option