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3-step binominal tree For the case of call options, and S 0 = 100, r = 0.07, q = 0.05, sigma = 0.3, T =

3-step binominal tree

For the case of call options, and S0 = 100, r = 0.07, q = 0.05, sigma = 0.3, T = 1

What is the Early exercise premium when K = 125?

In the following, S0 is the stock price in dollars as of today, K is the strike price in dollars, r is the continuously-compounded risk-free interest (as a decimal), q is the continuous dividend yield (as a decimal), sigma is the volatility (as a decimal) and T is the time to maturity in years.

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