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In the next year, the price of a stock will either go up by 20% or go down by 20%. No dividends are paid, the
In the next year, the price of a stock will either go up by 20% or go down by 20%. No dividends are paid, the risk-free rate is 5% and the current price is 20 USD. Find the price of a one-year put option on the stock with a strike price of $20 using binomial pricing and find the price of a one-year call option on the stock with a strike price of $20 using risk neutral probabilities.
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