Mark is interested in buying one share of York Enterprises. A share currently sells for $1,400.

This company is a conglomerate and has a Beta of 1. It does not pay any dividends.

Mark believes that the value will either increase by 25% or fall by 20% over the next year.

Mark is very risk averse and wants to shield himself from any decrease in the value of his share below $1,300, without forfeiting any of the shares upside potential. Mark can borrow and lend at the risk-free rate of 7% per year.

Would Mark be interested in buying a Put or a Call on the stock? What strike price would he like this option to have?

How much should such an option sell for in the market?

If no options currently trade on the stock, is there a way for Mark to create a synthetic option with identical payoffs to the option above?

If so, how would he do it?

How much does the synthetic option cost?