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Use Black Scholes model A stock is trading at $100, with -0.02, -0.3, r-896. A new exotic option will pay the following amounts at the
Use Black Scholes model
A stock is trading at $100, with -0.02, -0.3, r-896. A new exotic option will pay the following amounts at the end of 6 months. Payoff- 10 if 80 S ST105 a) Graph the payoff 0 if ST80 2(S - 100) if ST 2 105 b) Find the cost. Hint: you will need to combine some options.1 A stock is trading at $100, with -0.02, -0.3, r-896. A new exotic option will pay the following amounts at the end of 6 months. Payoff- 10 if 80 S ST105 a) Graph the payoff 0 if ST80 2(S - 100) if ST 2 105 b) Find the cost. Hint: you will need to combine some options.1Step by Step Solution
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