Question: 2. This question tests your understanding of binomial option pricing. The current price of a stock is $100. The tree is given below. The monthly

2. This question tests your understanding of binomial option pricing. The

2. This question tests your understanding of binomial option pricing. The current price of a stock is $100. The tree is given below. The monthly (discretely compounded) risk-free return is 10% per period. 190 100 70 (a) Find the current price of a European call with a strike price of $124. (b) Consider an options trader who has written 100 call options on the stock with exercise price of $124. How many shares of the stock should he hold at time 0 in order to hedge his options position

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