M
mooneyse
Guest
Hello, I'm not sure if this belongs here but here it goes. I have an assessment for a job next week and I was given a list of sample questions. This is one of the questions that I don't understand and I was hoping you could shed some light on it for me.
"If there is a 50% chance an asset will be worth $100 in a week, & a 50% chance it'll be worth $200 in a week, what's the fair price on the option?"
I thought the option price depended on many factors, and the strike price would definitely be needed to deduce an answer? Should I just be hazarding a guess at approximately 1 or 2?
Any help is appreciated, thanks.
"If there is a 50% chance an asset will be worth $100 in a week, & a 50% chance it'll be worth $200 in a week, what's the fair price on the option?"
I thought the option price depended on many factors, and the strike price would definitely be needed to deduce an answer? Should I just be hazarding a guess at approximately 1 or 2?
Any help is appreciated, thanks.