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Suppose there is a European option that has XYZ stock as underlying asset, which currently trades at $90. The option expires in one period, and
- Suppose there is a European option that has XYZ stock as underlying asset, which currently trades at $90. The option expires in one period, and has a strike price of $95. The stock price either goes up by 20% or drops by 20%. The risk-free rate is 5%. For Call, Put, Protective Put, Covered Call, Straddle options, price the option using the binomial method.
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