CHAPTER 11
Trading Strategies Involving Options
Practice Questions
Problem 11.1.
What is meant by a protective put? What position in call options is equivalent to a protective
put?
A protective put consists of a long position in a put option combined with
CHAPTER 12
Binomial Trees
Practice Questions
Problem 12.1.
A stock price is currently $40. It is known that at the end of one month it will be either $42 or
$38. The risk-free interest rate is 8% per annum with continuous compounding. What is the
value of
