Consider the option with payoff f(S) = max(S-165, 0) + max(148-S, 0) + max(S-203,0). The option can be exercised on two dates, on date t=0 and t=1. The stock price follows geometric Brownian motion, with r = 2%, = 18%, dividend = 1%. The options expire in one years time.

a) Suppose the stock price is currently $148, what is this option worth assuming it is a European option?

b) On date t0, at what initial stock price are you indifferent between holding the option and exercising it now? If there is no such price (i.e., it is always optimal to exercise now, or you would never exercise now, indicate as such).