Question 14. Consider binomial model with So = 100, u = 1.2, d = 9 and r= .05. Use a three period (two step) binomial tree and replicating portfolios or perfect hedging to price a long straddle holding both a long call option and a long put option on the same stock with the same strike price) with K = 110. This pays at maturity the absolute value of the difference between the stock price at maturity and the strike price, Payof} = Sr - Here is the stock price tree: 144 120 So = 100 108 90 81