The range of the distribution against markets assumption

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AAPL current trades at around 100. You think the price at the end of the year will follow a uniform distribution centered at the current price, with a range of 40 points in either direction by the end of the year. Ie price follows uniform [60 140].

1. Price a BINARY PUT at strike = 80, 100, and 120.

2. Price a BINARY CALL at strike = 80, 100, and 120.

3. Price a regular PUT at strike = 80, 100, and 120.

4. Price a regular CALL at strike = 80, 100, and 120.

5. You want to compare your assumption about the range of the distribution against the market's assumption. You observed that the PUT at strike 100 is priced at $15. What is the range and MAD implied in the price of the PUT option?

Reference no: EM131005488

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