Question: Consider a binomial pricing model with the following assumptions: - the underlying stock is currently trading at $200 per share - risk-free rate is 1.5%

Consider a binomial pricing model with the following assumptions:

- the underlying stock is currently trading at $200 per share

- risk-free rate is 1.5%

- probability of price increase is 50%

- price change for each period is 50%

- call option exercise price is $250 per share

Calculate option value in the up position.

1. $0

2. $50

3. $100

4. $-50

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