Stuck in an airport , you are forced to use the binomial method to estimate the value of a call option for a stock . The option is for 365 days . The range in the stock price over this period is quite large . The high end of the stock could be as high as 60 and the low end is estimated at $ 10 . The flight attendant tells you that the current price of the stock is $ 24 . The call option has a strike price of $ 13.00 and the cost of money is 10 % . You can buy the option " privately " for a $ 10.00 . a ) What is the estimated price of the option ? b ) Should you buy the option for $ 10.00 ? ) Break apart your answer to a ) into the fundamental value of the option and its speculative / time value .