Consider a single-period CRR model with interest rate 0.05, S(0) = 10, u = 1.2 and d

Question:

Consider a single-period CRR model with interest rate 0.05, S(0) = 10, u = 1.2 and d = 0.98. Suppose you have written an option that pays the value of the square root of the absolute value of the difference between the stock price at and $10.00; that is, it pays √S(1) - 10|. How many shares of the stock should you buy to replicate this payoff? What is the cost of the replicating portfolio?
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...