Using the binomial option pricing method

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Reference no: EM131876002

Shares of Postmate are trading at $ 25 per share. You want to buy a 1 year call option on Postmate with the following characteristics:

a. Strike price $ 35; Time to maturity = 1 year;

b. Expected price of Postmate stock in 1 year is either $ 45 or $ $ 15. c. Risk free rate on 1 year t- bills = 0.25%

Using the binomial option pricing method calculate the price of the call option you want to buy. Using Put- Call parity find the price of a put option with the same strike price and Maturity.

Reference no: EM131876002

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