AAPL current trades at around 100. You think the price at theend of the year will follow a uniform distribution centered at thecurrent price, with a range of 40 points in either direction by theend of the year. Ie price follows uniform [60 140].
Q1. Price a BINARY PUT at strike = 80, 100, and 120.
Q2. Price a BINARY CALL at strike = 80, 100, and 120.
Q3. Price a regular PUT at strike = 80, 100, and 120.
Q4. Price a regular CALL at strike = 80, 100, and 120.
Q5. You want to compare your assumption about the range of thedistribution against the market’s assumption. You observed that thePUT at strike 100 is priced at $15. What is the range and MADimplied in the price of the PUT option?
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