The current price of a non-dividend-paying stock is $62.67 and you expect the stock price to either go up by a factor of 1.424 or down by a factor of 0.702 over the next 0.5 years.

A European call option on the stock has a strike price of $63 and expires in 0.5 years. The risk-free rate is 7% (annual, continuously compounded).

1.What is the option payoff if the stock price goes up?

2.What is the risk-neutral probability of an up movement?

3.What is the value of the option?