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a . Suppose that a stock has current price of $ 1 5 . It is expected that in 4 months, the value of the

a. Suppose that a stock has current price of $15. It is expected that in 4 months, the value of the stock would either be $20 or $13. A 4 months call option with strike price of $17 on the stock is being initiated today. If the interest rates are 5% per annum for 4 months continuously compounded then, what is the price of the call option today?
b. What is the price of the option if its a 4 months put option with strike price $18?

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