Exercise 4.16 (The binary option). The binary call option is a European style option with payoff at expiry W(N, j) = B > 0 when S(N, j) > K and nothing otherwise. The binary put option has payoff at expiry W(N, j) = B > O when S(N, ;) 0 when S(N, j) > K and nothing otherwise. The binary put option has payoff at expiry W(N, j) = B > O when S(N, ;)