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You would like to purchase a put option for a stock. Today is August 12, 2021 before the market has opened. Stock Price Strike Price
You would like to purchase a put option for a stock. Today is August 12, 2021 before the market has opened. Stock Price Strike Price o Option Type Put Expiration August 25, 2021 Interest Rate % Annual - 252 trading days) 2.350 23.03 27.00 0.077 (10 pts) a) Create the complete daily binomial lattice for the stock price. Consider weekdays only. Show your complete lattice either on Excel or on a handwritten document that is uploaded with the question number to receive credits. (10 pts] b) Using the daily binomial lattice of part (a), find the option value. Consider weekdays only. Show your complete option value lattice either on Excel or on a handwritten document that is uploaded with the question number to receive credits. (5 pts) c) How can you relate the option price and its lattice with the lattice in part (a)? Is it a low option price or a high price? Why? Discuss with a couple of sentences. You would like to purchase a put option for a stock. Today is August 12, 2021 before the market has opened. Stock Price Strike Price o Option Type Put Expiration August 25, 2021 Interest Rate % Annual - 252 trading days) 2.350 23.03 27.00 0.077 (10 pts) a) Create the complete daily binomial lattice for the stock price. Consider weekdays only. Show your complete lattice either on Excel or on a handwritten document that is uploaded with the question number to receive credits. (10 pts] b) Using the daily binomial lattice of part (a), find the option value. Consider weekdays only. Show your complete option value lattice either on Excel or on a handwritten document that is uploaded with the question number to receive credits. (5 pts) c) How can you relate the option price and its lattice with the lattice in part (a)? Is it a low option price or a high price? Why? Discuss with a couple of sentences
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