The price of IBA stock is $111. It will either increase $11 or decrease $8.9 at the end of month 1. If the price is up in the first month, it will either increase $16 or decrease $20 at the end of month 2. If the price is down in the first month, it will either increase $14.2 or decrease $12.5 at the end of month 2. The risk-free interest rate is 2% per month.

1. Using the replicating portfolio approach, calculate the price of a 2-month call option with a strike price of $107.
2. What is the price of a 2-month put option with a strike price of $107?