Suppose that, in each period, the cost of a security either goes up by a factor of u = 2 or down by a factor d = 1/2. Assume the initial price of the security is $100 and that the interest rate r is 0.

Assuming the strike price of a European call option on this security is $150, compute the possible payoffs of the call option given that the option expires in two periods. It may help to sketch a diagram of the possible security price movement over two periods.